The Arbitrum airdrop claiming process officially went live on Thursday, and the market witnessed high volatility in the price of the ARB token. Before the airdrop, some exchanges had listed IOU ARB markets, which caused the price of ARB to be more than 85% higher than it is now. However, at the time of writing, the token is trading at $1.25 per unit. In the last 12 hours, its price ranged from $1.10 to $11.80 per token.
Before going further, let’s understand what an airdrop is.
What is an Airdrop?
Airdropping typically refers to the process of distributing tokens or coins to a large number of investors or community members. It is a marketing strategy employed by blockchain and cryptocurrency startups to spread their tokens among the community and generate interest in their projects.
Arbitrum, a Layer 2 scaling solution for Ethereum, conducted an airdrop of just over a billion ARB tokens, equivalent to 11.6% of the token supply. The tokens were distributed to Ethereum addresses that had interacted with Arbitrum smart contracts before September 1, 2021. The reception of the airdropped tokens has been mixed, with some investors claiming their tokens and others not showing any interest.
Price Volatility and Trading Volume
The ARB token, despite bitcoin nearing $29,000 and ethereum registering an all-time high of $1,855, has been experiencing wild price swings. The token’s trade volume is significantly higher than the ARB IOU volumes recorded yesterday at $8.7 million. At present, roughly $849.81 million in ARB volume has been recorded. The top three crypto exchanges with the most ARB trading activity are Binance, Okx, and Bybit.
As per CoinMarketCap, there are 1.275 billion ARB tokens in circulation, out of which 474 million ARB have been claimed by 244,255 unique addresses. Therefore, thirty-nine percent of eligible addresses have been claimed, and more than 40% of the airdropped ARB has been received by recipients. At $1.25 per unit, ARB’s overall market valuation was $1.6 billion on Thursday afternoon, making it one of the biggest launches of a governance token in the crypto market.
Impact on the Crypto Market
The ARB token’s price fluctuations have been a result of the airdrop and the initial desire for investors to liquidate their holdings at higher prices. Several exchanges had already listed IOU ARB markets before the airdrop, causing a price discrepancy. Investors buying and selling the tokens on these markets caused the price of ARB to surge before the official distribution.
However, it is important to note that price fluctuations are common in the cryptocurrency market, and such volatility can continue until the market stabilizes. The fact that ARB has garnered the attention of the crypto community is indicative of its potential.
The ARB token airdrop has generated considerable interest and excitement within the crypto community. The high volatility suggests that there is potential for the token to perform well moving forward, making it an attractive investment opportunity for traders. However, it is crucial to remember that price swings are common in the cryptocurrency market, and investors should perform due diligence and invest wisely. The launch of governance tokens such as ARB highlights the growth of blockchain technology and the continued innovation within the crypto market.