Airdrop Coin Analysis | Published Nov 21, 2023
$PYTH recently airdropped a portion of its supply to on-chain users of a variety of networks, predominantly Solana users.
In an effort to understand whether or not it’s worth buying airdropped coins, we’ve done some preliminary analysis on historical price performance of airdropped tokens in their first 60 days of trading.
Keep in mind this analysis does not account for market conditions, project fundamentals, or tokenomics. The only common thread between each of these projects is that their initial supply was airdropped to users.
We took a sample of the volume weighted average price (VWAP) of each coin in its first and second day of trading as well as its first and second week of trading.
We then compared this to the peak price in the first 60 days of trading. This exercise seeks to understand if DCA’ing into a an airdopped coin in the first 7-14 days of trading is a profitable endeavor.
The answer for most of these coins is yes.
All 7 of these coins had a 60 day peak higher than the day 1 and day 2 VWAPs as well as the week 1 VWAPs.
Meaning, if you bought on day 1 or day 2 of trading, you’d have an opportunity to sell higher at some point in the subsequent 60 days. The outlier here is Uniswap, which had its peak come within the first 12 hours of trading, though Uniswap did go on to >10x its day 1 VWAP in the bull market.
One theory as to why airdropped tokens frequently see large pumps followed by large dumps in the 30-60 days following the token launch is that market makers manipulate the price.
1) Airdrops go out & most users dump.
2) Market makers accumulate most of the airdropped supply, giving them control over the liquid supply of the token.
3) With no supply left on the market, they continue bidding the price up causing a supply squeeze which is followed by buyers FOMOing in.
4) At elevated prices, market makers start distributing the supply at a profit.
Here’s and example with $APT:
Here’s an example with $APE
Here’s an example with $OP:
Here’s an example with $DYDX:
Conclusion:
It’s a reasonable strategy to accumulate $PYTH via a DCA strategy in the first days and weeks of trading with the intent of selling on any large pumps in the first 30 to 60 days. There is risk here as a common thread with a lot airdropped tokens is that they eventually bleed out to much lower prices than their week 1 and week 2 VWAPs.