Holding Airdropped Crypto Tokens: CoinGecko Reveals Risks and Rewards
Summary:
A study by CoinGecko reveals that nearly half of all airdropped crypto tokens, including prominent ones, reached peak prices within two weeks, often resulting in holders missing out on selling at the all-time high. On the flip side, substantial sell-off of airdrops after listing can lead to a sharp price drop, reducing the token's appeal. Furthermore, participants often view technical issues during the claim process as a sign of an unreliable network, leading them to consider selling off the token.
A recent study by CoinGecko, a digital currency data collector, suggests that holding onto an airdropped cryptocurrency for more than a fortnight almost half the times meant missing out on the high selling point. The enthusiasm for such tokens has received a considerable boost since 2020. Engaging in network activities prior to a blockchain launch or completing promotional services are typical ways to acquire these complimentary tokens. A report dated 1st February by Cointelegraph stated that a teenager was able to make over $1 million through a Solana-based JUP airdrop.
The same CoinGecko study revealed that almost half (46%) of all airdropped digital coins, comprising prominent tokens like Ethereum Name Service, Blur, and LooksRare, recorded top prices within 14 days. "46% of the 50 major airdrops marked peak token rates within the initial 14 days of their airdrop date", the study mentions. Tokens such as Manta Network (MANTA), Anchor Protocol (ANC), and Heroes of Mavia (MAVIA) also followed the same pattern.
While few projects hit top gains within days, in the last four years, only one airdropped token took over a year to arrive at its peak price. The token Sweat (SWEAT) reached an all-time high within two days of airdrop, Wen (WEN) hit 37% peak gains in three days, and Optimism (OP) took 1 year and 7 months to reach its peak.
However, substantial offloads of airdrops right after listing can trigger a drastic decrease in value, undermining the appeal of the token. Very often, the token doesn't manage to bounce back to its highs. On 22nd February, Cointelegraph reported about the Ethereum layer-2 network Starknet, experiencing an almost 60% fall when a large volume of the airdropped token was offloaded by Ethereum infrastructure firm Nethermind and various airdrop farmers.
Additionally, claimants may perceive technical glitches during the token claim process as signs of an unstable network, compelling them to contemplate selling off the token. For instance, in March 2023, there was an increase in the number of Arbitrum (ARB) tokens being moved to exchanges, amounting to 150% more than the inflow to wallets causing an extensive offload. This happened due to users facing issues with the airdrop claim page crashing within an hour of the process initiation, attributed to a high volume of requests.
Published At
2/24/2024 8:22:34 AM
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