Airdropped Tokens: Performance and Market Dynamics | Flash news details

According to IntoTheBlock, tokens dropped through the air often see initial popularity and performance boosts. However, over time, they tend to lose their value due to decreasing interest in the market and increasing supply of tokens. The report highlights that during the first few weeks after the airdrop, tokens may see significant price increases, driven by the initial hype. For example, a token that dropped in December 2024 saw a 50% price increase within the first week. However, as the novelty wears off, trading volumes tend to decline. Dropped tokens like TokenX, which was distributed in November 2024, saw a 40% drop in trading volume within the first month. This decline is often attributed to a decline in speculative trading, with initial excitement waning.

The implications of these findings are important for traders. Airdropped tokens often come with a large amount of supply, which can lead to supply inflation. As more tokens are distributed or unlocked over time, increased supply can put downward pressure on prices. For example, TokenY, which was introduced in October 2024, saw its price drop by 35% over two months as additional tokens were released into circulation. This trend underscores the importance of monitoring token issuance schedules and understanding the long-term supply dynamics of airdropped tokens. Traders should be aware that although these tokens may offer short-term gains, the long-term outlook may not be promising without sustained demand.

Technical indicators and trading volume data support these observations. IntoTheBlock’s analysis of dropped tokens reveals that Relative Strength Index (RSI) levels often indicate overbought conditions shortly after an airdrop, followed by a decline as the market corrects itself. For example, TokenZ’s RSI peaked at 75 in the first week after the September 2024 airdrop but fell to 45 within a month. Additionally, on-chain metrics show a decline in active wallet addresses and the number of transactions over time. This decrease in cross-chain activity indicates decreased engagement and interest from traders. Furthermore, liquidity metrics indicate that market depth often decreases, making it difficult to execute large trades without impacting the price. These technical and volume indicators provide important insights for traders who are considering holding token coins for the long term.