This Key Tool Can Reveal the Best Entry Price for Airdrop Opportunities

by Bruce Ng
By Bruce Ng

Last week, I highlighted a pricing pattern unique to recent airdrops on the Solana (SOL, “B”) network.

(To learn more about airdrops, you can read my overview here.) 

But just because you know the pattern to look for doesn’t mean you know whento act if you want to invest.

And when it comes to investing in crypto, knowing when to buy is just as important as knowing what. Even more so for smaller projects, as many airdrops are. 

So, I got to work looking to find a way to determine the best way — and time — to play an airdrop. 

And I found yet another pattern. 

To demonstrate, we’ll be looking at three case studies today. Two of which may look familiar …

Case study 1: JTO

You may remember Jito (JTO, Not Yet Rated) from last week. It’s a liquid staking platform on Solana that launched its token as an airdrop on Dec. 7, 2023.

Here is JTO’s price action since then … 

JTO/USDT. Click here to see full-sized image.

 

I’ve made a few notes on the chart above. But the important points are these:

  • Initial Surge: Firstly, JTO posted a giant green candle upon launch, soaring from its initial price near 15 cents up to $4.90. That’s an over 3,000% gain!

    But as I noted last week, green candles like these are very common behaviour for most airdrops.

  • Steep Correction: Here’s where airdrops are a bit of a double-edged sword. The initial airdrop drums up hype and excitement, sending the price soaring. But not all airdrop receivers are project loyalists. Some may have qualified just to sell the token as soon as it starts trading publicly. This tends to end in a steep sell-off immediately after the hype wears off.

    In the case of JTO, it saw a retracement to a low of $1.30, a roughly 73.4% loss from that $4.90 high.

  • Stabilization: Once the downside pressure is gone, JTO stabilized near the $2 level and has moved sideways since.  

Now, this might seem identical to the key elements of the pattern I pointed out last week. And indeed, there is a lot of overlap. 

But this includes a key element last week’s analysis didn’t show. Let’s look at another case study before I reveal it. See if you can find it.

Case Study 2: PYTH

Pyth (PYTH, Not Yet Rated) is another returning name from last week.  The token, PYTH, was launched on Nov. 20, 2023, and saw a similar price action to JTO post launch.  

PYTH/USDT. Click here to see full-sized image.

 

I removed the labels, but you can still see the three important elements: An initial surge, marked by the large green candle — a sign of upward price action, a steep correction and, finally, stabilization leading to sideways trading.   

Just like clockwork!

In PYTH’s case, its trading price at launch was 28 cents. Its all-time high — the top of that big initial surge — is just under 50 cents. In other words, that’s about an 80% increase.

Its steep correction brought it below its initial trading price to 24 cents. That represents a 52% drop. 

And it stabilized near its all-time high, trading lately near 48 cents.

Case Study 3: Uniswap (UNI)

Finally, let’s take a look at Uniswap (UNI, “B”). The leading decentralized exchange, Uniswap launched its token UNI on Sept. 17, 2020. 

Click here to see full-sized image.

 

UNI/USD.

And again, you can see the first two points of our pattern are there:

  • Initial Surge: UNI climbed from 47 cents all the way to $8.50 in its initial push up post launch.
  • Steep Correction: After the initial hype of the launch wore off, UNI went into a multiweek downtrend for about six weeks before hitting a bottom of $1.75.

    This correction marks an almost 80% drop.

Here's where the pattern diverges. Notice that UNI didn’t stabilize and trade sideways. Instead, it exploded about 40x — or 2,400% higher — to $44.

So, what happened?

A catalyst. 

See, UNI launched at a pivotal moment in the 4-year crypto cycle: right at the beginning of the fourth year.

As a reminder, the broad crypto market operates on this cycle. 

  • The first year is bearish.
  • The second transitions the market from bearish to bullish.
  • The third is bullish.
  • And the fourth is an even bigger bull market.

That means UNI didn’t have to wait long in a consolidation phase for the broad market rally to send it into the stratosphere.

At its all-time high posted in that bull market, UNI achieved a peak circulating market cap of $22 billion. 

So, the pattern is clear: Airdrops tend to correct sharply following their initial launch. Then, they’ll consolidate until the next catalyst strikes to push their price higher.

Since we’re on the precipice of our next bull market rally, we likely have a catalyst on the horizon.

The trick to trading airdrops is figuring out how low one can fall in its initial correction. By targeting that price, you avoid volatility, minimize downside risk and maximize your profit potential.

To do that, we use a tool called Fibonacci retracements to determine the lowest point before price jumps again. 

It’s a deceptively simple formula but can get rather complicated in practice. If you’re interested, you can read more about Fibonacci retracement levels here.

And in looking at the Fibonacci levels in our case studies, we can see that ALL three, JTO, PYTH and UNI, retraced to around the 0.786 Fib level before bouncing back up!

Just take a look:

Click here to see full-sized image.

 

Each airdrop coin above dropped roughly to the 0.786 Fib level and then rebounded back up. 

This gives a pretty solid target if you want to invest in an airdropped asset but don’t want to deal with its early volatility: Identify the price that correlates to a retracement to the 0.786 Fibonacci level.  

The coin’s price could go lower or higher than this level as it consolidates. But as a general pattern, they usually end up around there. 

Of course, the price action of all coins — whether airdropped or not — will depend on the overarching crypto market condition — i.e., bull or bear. 

But, as I said, we’re in a bull market and on the precipice of another rally.

So, conditions for making an airdrop play are looking good.

You can check out what airdrops are available or coming up on websites like Airdrop Alert or Earn.Fi

And if you’re interested in this type of trading — targeting small-cap opportunities with big growth potential — I suggest taking a look at New Crypto Wonders for even more. 

Best,

Dr. Bruce Ng

About the Contributor

Dr. Bruce Ng is a literal rocket scientist who was among the first to write about DeFi. Today he applies the same mathematics and scientific methods to the crypto space to discover the world’s most promising, and potentially most profitable, altcoins.

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