Should You Sell Your (Cosmos) Airdrops? 🪂
You received an airdrop and now you are left with the decision:
Sell now
Sell in 1 week
Sell in 1 month
Sell in 3 months?
Hodl for life (long term)?
I will look at the historical data to see which strategy has the highest profits.
Wonder how to qualify for airdrops? I made a thread on upcoming & rumoured Cosmos Airdrops 🪂
If you haven’t seen it already:
So let’s dive in…
$250 invested in $JUNO in Dec yielded a $NETA airdrop $45k+ worth two months later 💰 💰 💰
But why hodl, when the airdropped token might go to zero? Why not take profits and put it into the tried and tested BTC/ETH or your favourite blue chip?
Others argue it might be the next $UNI/$JUNO/$DYDX. It’s too easy to look at the chart and say What IF I would have sold here (the pico top).
So what to do?
As a trader/investor you need to always keep in the back of your mind that Anything Can Happen. Especially in Crypto. So the only thing left for you to do in the face of uncertainty is exercise good risk management. Good risk management means we do an historical analysis on airdrops and take hopium & emotions out of the equation.
We add all big airdrops in the past and compare our portfolio today if we had sold after:
- 1 week
- 2 weeks
- 1 month
- 3 months
- NEVER SELLING
Jordan Belfort: “I’m NEVER SELLING”
Luckily an analyst at Messari did the homework for us!
I’ll keep this analysis for the purpose of this thread simple and compare:
Scenario 1: HODL
vs.
Scenario 2: sold after 1 week
Scenario 1: HODL
Scenario 2: Sold after 1 week
Source:
https://dune.xyz/messari/Messari:-Airdrops
So this leaves us with these numbers:
Scenario 1(HODL) portfolio value today: $29,000
Scenario 2 (SOLD) portfolio value today: $108,000
Selling after the 1st week gave ~3,7x profits compared to hodling
Case closed right?
Not really, it’s an unfair comparison for two reasons:
1) The markets have been down only for 3 months now (dec ’21 to march ‘22). So of course the hodler scenario is gonna take the brunt of it. What this analysis then implies is that you time the markets right.
If we had compared the prices at peak euphoria in April ’21 before the crash, the hodler actually outperformed by over 2x.
2) This analysis was done on airdrops in the Ethereum ecosystem. A lot of upcoming airdrops are happening in the Cosmos ecosystem. For those unfamiliar with Cosmos, it is a very community oriented ecosystem. Airdrop hodlers have been rewarded greatly in the past. If you sell one airdrop that may disqualify you from getting more airdrops in the future.
E.g. You stake $ATOM and got airdropped $OSMO, $JUNO. You then stake $OSMO & $JUNO and got dropped $NETA. You stake $NETA and get airdropped … (ad infinitum?).
If you would have sold those, you would have missed out on some awesome airdrops in the future.
$250 worth of $JUNO in Dec yielded a $NETA airdrop $45k+ worth two months later…
Assuming this trend will continue, there is a massive upside that this type of analysis doesn’t take into account?
Okay. So the original analysis is flawed, but what then?
Here’s my process:
- If my high time frame directional bias of crypto is bullish, I’m more inclined to let things ride and take less profits. (I personally use On-Chain Analysis for this).
- If HTF directional bias is bearish, I am more inclined to take profits.
- Read whitepaper of the token airdropped
- Sell it all if you don’t see the value proposition.
- Ask yourself: Would I invest my money into this if I wasn’t gifted this for free?
(You can’t answer this if you haven’t done your homework)
- If I do like it, take 20–50% profits, depending on my high time frame directional bias and let the rest ride for a bit.
- Then put these profits in my pocket (stablecoin farming for example) for a rainy day or into ETH/BTC depending on where we are in the cycle.
OR…
- Put profits into your (new) kepler wallet in form of $ATOM/ $JUNO/ $OSMOS/ $SCRT to continue the process ;)
- Understand the opportunity cost of having money in a project for a period of time, waiting for it to go up, or for future airdrops, when other things could be outperforming it.
Opportunity cost is a big topic and deserves a thread of its own.
@DefiantNews published this article two days ago, that inspired me to write this thread:
https://thedefiant.io/messari-airdrops-112-profit-selling/
If you don’t follow them already, be sure to do so now!
Oh, and none of this is investment advice. I’m not a professional and mostly am stumbling my way through the world the same way I was at age 13. Just documenting and sharing some thoughts and none of it is a science. I, like everyone else, am simply an aged baby walking blindfolded into a forest, startled by my own humanity.