Lock in profits when you can make money; no one goes bankrupt for securing their gains.
Written by: Sly Odogwu
Translated by: Luffy, Foresight News
Some sold PROVE at $0.6, others at $1.3, while some are still holding, hesitating over the question of "when to sell."
Most airdrop recipients find themselves in a dilemma: unsure of when to sell their tokens. Some sell too early and regret it later; others hold on until the token's value plummets to nothing, ultimately forgotten by the market.
To determine when to sell airdrop tokens, you need to consider several key factors. There is no 100% accurate formula, but the following framework can guide your decision-making. While it may not guarantee absolute correctness, it can help clarify your thoughts.
Market Valuation
Every project has its own market valuation, which reflects the overall value of the project. To assess whether the valuation is high or low, the key is to compare the "Fully Diluted Valuation (FDV) or Market Capitalization (MC) of similar projects."
For example, if your airdrop token comes from projects like Layer1, Layer2, decentralized exchanges (DEX), or cross-chain bridges, check the FDV/MC of other projects in the same space.
If the project's valuation is significantly higher than its peers, proceed with caution (there is a high probability of a bubble);
If the valuation is undervalued, there may still be room for growth.
Some projects set their FDV extremely high or low upon launch. By comparing with similar projects, you can more clearly assess the reasonableness of its valuation and make more informed decisions.
I made this mistake with the W token: I didn't do a proper valuation comparison and held on until the price dropped to rock bottom.
Funding Scale
The scale of a project's funding is important because it determines the level of liquidity the project can provide. A portion of the funds raised will be used for liquidity building in the early stages; the more funding, the deeper the liquidity typically available.
A project that builds liquidity with $2 million is fundamentally different from one that does so with $20 million. Liquidity directly affects the volatility and trading volume of the token: the shallower the liquidity, the easier it is for the token price to experience wild fluctuations; the deeper the liquidity, the more stable the price tends to be.
Additionally, pay attention to the "initial circulating supply": if a large number of tokens are set to unlock in the future (for example, when team or VC holdings expire), the likelihood of a "massive sell-off" increases.
Investors / Supporters
Who are the supporters of the project? Are they reputable institutions that value the community, or are they capital looking to exploit? Generally, reputable, long-term-focused venture capitalists (VCs) and community-oriented investors will add value to the project.
Often, supporters are also advisors to the project because they hold shares. However, be cautious: even popular projects backed by big-name VCs can experience token sell-offs due to "poor tokenomics advice" from their supporters.
Many popular projects have underperformed in airdrops and experienced token price crashes due to misguided guidance from their supporters. Therefore, it is advisable to review the past performance of these supporters' investment projects as a reference.
Market Sentiment
Closely monitor the public opinion trends on social platforms (such as X platform), as this reflects the public's perception of the token. The key is to learn to discern the authenticity of the information, determining which are sincere criticisms or objective analyses of popularity, and which are paid promotional content.
You need to filter out genuine analyses from "shills" and "biased fear, uncertainty, and doubt (FUD)." Additionally, the narrative of the sector is also important: if the project associated with the airdrop aligns with currently popular sectors (such as AI, RWA, meme coins, L2, etc.), the token will typically have stronger upward momentum.
Tokenomics
Through tokenomics design, you can clarify the distribution logic of the token, focusing on the following key points:
Token holder structure: what proportion do the team, VCs, and community hold?
Initial circulating supply: what percentage of the total supply is actually circulating at launch?
Distribution ratio: what is the token distribution ratio among different roles such as community, VCs, and the team?
Unlocking plan: when will the holdings of VCs and the team unlock, and how much will unlock? Is there a lock-up period for community airdrop tokens?
The rhythm of token unlocks directly affects price trends: large-scale unlocks often mean increased selling pressure and a higher risk of price decline; conversely, if the unlocking rhythm is gradual, the price tends to be more stable.
Team
The team is the core decision-maker of the project, and their positioning and capabilities directly determine the project's direction. You need to consider:
Does the team value the community? Are they willing to listen to user feedback?
Does the team have past project experience or success stories?
Is the team genuinely interested in creating a valuable product, or do they just want to cash out quickly?
Even with comprehensive analysis, a single decision by the team can lead the project to success or failure. Additionally, the team's level of commitment to the project can indirectly reflect the long-term performance of the token. If the team frequently changes or shifts focus, be wary of risks.
Most importantly: is there a potential for the team to engage in on-chain malfeasance, such as misappropriating funds or manipulating prices?
Technology and Practicality
Technical strength and product practicality determine the real demand for the token:
If the project has technological innovations and the product can solve real problems (such as improving trading efficiency, reducing costs, etc.), the token will have long-term demand support;
If the technology is weak and merely replicates other projects, it is advisable to consider selling early to avoid being trapped.
Listing on Centralized Exchanges
Pay attention to announcements regarding the token's listing on centralized exchanges, but note: it is no longer the case that "listing on Binance will drive the token price up." Currently, Upbit is one of the few exchanges that can drive token prices up; many airdrop tokens experience a surge after being listed on Upbit.
Therefore, if your airdrop token is confirmed to be listed on Upbit, consider selling during the "Upbit listing hype period" or "when liquidity is sufficient."
Macroeconomic Environment
Even the best projects or airdrops can struggle to perform well during a bear market or when the overall market is sluggish:
During a bull market: overall market sentiment is optimistic, and there is greater potential for token price increases; consider extending your holding period appropriately;
During a bear market: selling pressure is high, and it is advisable to cash in profits early and secure your gains.
Macroeconomic sentiment directly affects the performance of individual tokens; understanding which phase of the bull-bear cycle the current market is in is a key prerequisite for making decisions.
Final Recommendations
You need to make decisive decisions and stick to your judgment. The above framework is merely to help you conduct a more rational analysis, not an absolute guideline.
When making decisions, the primary principle is to eliminate emotional interference; greed and fear often lead to poor choices. Ultimately, your "firm judgment" is the most important reference.
Use these factors as a decision-making framework, but remember: lock in profits when you can make money. After all, no one goes bankrupt for securing their gains.
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