YEREVAN (CoinChapter.com) — Jupiter coin JUP slumped 63% on Feb. 1, reaching $0.60 in the Asian-Pacific session. Notably, the drop came immediately after the JUP Airdrop, which gained much traction in the crypto community.
The detailed 15-minute chart shows that the JUP/USDT exchange rate picked up at approximately 06:00 UTC. However, the current session will show if traders are willing to bet on the Solana-based coin.
Jupiter Airdrop And Investor Behavior
In detail, Airdrops are a popular strategy within the cryptocurrency ecosystem, used to distribute tokens or coins to the wallets of current cryptocurrency holders, often for free or as a reward for small tasks. Generally, they increase awareness, distribute the tokens to a wide audience, and encourage token adoption.
So, why would Airdrop recipients unload their tokens? The answer is PROFIT and low expectations. Interestingly, high rewards could also prompt a selloff as traders scramble to secure their gains.
While there are no specific statistics that apply universally, historical trends show that airdrops with no strings attached and from less reputable projects tend to see higher rates of immediate selling. In contrast, well-regarded projects with clear use cases and active development may experience less selling pressure post-airdrop.
Why Would JUP Holders Sell?
JUP Airdrop was well-advertised, and Solana currently commands a high position in the DeFi sphere, which could ensure investor trust.
Solana liquid staking tokens (LSTs) backed the interest-free loans. To qualify for the first airdrop, wallets had to interact with Jupiter directly before Nov. 2, 2023, making it one of the largest airdrops. Thus, trust doesn’t seem to be an issue. However, the market dynamics also play a part in the decision, and, as mentioned, the desire to secure higher-than-expected gains.
For example, the Uniswap airdrop in late 2020 is also a well-documented example where many recipients sold their tokens shortly after receiving them.
Reports and analyses from various crypto analytics platforms suggest that a significant percentage of wallets that received the UNI token airdrop sold their tokens within days or weeks after the airdrop. As a result, the UNI/USDT exchange rate fell over 75% in the first week.
This behavior is attributed to various factors, including the immediate liquidity provided by Uniswap, the high initial valuation of the token, and the broader trend of airdrop recipients taking profits from “free money” without a vested interest in holding the tokens long-term.
However, in the subsequent months, UNI price soared a whopping 1,300%, peaking in unison with the broader crypto market. Thus, JUP’s drop immediately after the Airdrop is not a ‘death sentence’ for the token.