Popular Crypto Analyst Reveals Why Holding Airdropped Tokens Rarely Pays Off

by

As a seasoned crypto investor with several years of experience under my belt, I find Aylo’s analysis on the performance of tokens launched through airdrops both insightful and thought-provoking. Based on the data presented, it appears that the odds are heavily stacked against holding onto airdropped tokens for the long term, especially when compared to Bitcoin (BTC).

On July 8, an anonymous cryptocurrency analyst going by the name Aylo posted a detailed examination of the performance of tokens distributed through airdrops on social media platform X.

Initially, Aylo showed interest in examining the success stories of tokens distributed via airdrops, pondering if it’s beneficial to keep such tokens. He delved into data from the top 500 cryptocurrencies ranked by market capitalization, contrasting their current prices with their launch prices.

As a researcher studying the cryptocurrency market, I discovered that 23 out of the 31 tokens launched have experienced a decline in value since their introduction to the market. Some of these tokens underwent considerable drops. In contrast, just four of these 31 tokens managed to surpass Bitcoin (BTC) in performance since their launches. Among these outperforming tokens, only one was introduced in the year 2024. Interestingly, two meme-related airdrops, BONK and DEGEN, have garnered remarkable success within the crypto community. Despite the prevailing negative sentiment towards the market, I noticed that TIA has performed exceptionally well above its launch price and outperformed Bitcoin as well.

Based on my research findings, I’ve determined that selling airdrops on launch day and subsequently converting them into USD or BTC is typically the most profitable approach. Although it’s feasible to predict an initial price surge after the launch, holding onto airdropped tokens generally results in inferior long-term returns. It’s important to remember that there are always exceptions, but the likelihood of possessing a successful airdrop, particularly when compared to BTC, is significantly low.

If you’re optimistic about a project’s future, Aylo advised that it’s often wiser to wait for lower prices before making a purchase instead of buying on the initial launch day. He pointed out that the upcoming market downturn could provide excellent investment chances for some of these tokens, which feature promising long-term potential.

Aydle made it clear that airdrops aren’t the only cause of these tokens’ decreasing values. Frequently, the project teams inflate their valuations with market maker assistance. Once users distribute the airdropped tokens, the artificially high valuation becomes apparent. He underlined the importance of considering Fully Diluted Valuation (FDV) in projects. Accepting airdrops signifies faith that tokens will increase in value despite significant token unlocks and investors protecting their investments with short positions.

According to Aylo’s analysis, farmers in the yield farming sector tend to sell their crops indiscriminately of the market price, focusing on maximizing yields rather than holding out for higher prices. However, data from Aylo indicates that many tokens fail to bounce back once these farmers exit the market. While there is still a chance for some tokens to rebound, market conditions can shift rapidly and Aylo’s findings represent a moment in time.

Aylo pointed out that numerous airdrops are haphazardly constructed, leading to unfavorable consequences for the token in both the short term and the medium term. He emphasized that carrying out an airdrop without negatively affecting the token’s value is a formidable challenge. Remarkably, he identified two unsolicited meme coin airdrops—BONK and DEGEN—that brought about impressive returns for their holders. The creators of these airdrops intended to foster vibrant ecosystems (Solana and Farcaster), respectively, and started with minimal initial valuations, which could have played a role in their prosperity.

As an analyst, I would caution against taking meme airdrops’ success for granted based on the examples of BONK and DEGEN. While these projects may have thrived due to their unexpected arrival and modest initial valuations, not every airdrop follows this pattern. In fact, many have failed instantly, leaving no trace behind. Therefore, it is essential to approach each airdrop with a critical eye and consider its unique circumstances before making any assumptions.

After finishing his remarks, Aylo recommended that crypto initiatives ponder over the shape of an airdrop they intend to carry out, should they choose to do so at all.

Read More

2024-07-09 21:51