Yesterday, ARB, Arbitrum’s governance token, made its debut on the crypto markets, and its price came with several surprises.
Given that the token was distributed for free with an airdrop, there was no initial reference value.
Taking as a reference the trades on Uniswap, which began immediately after the launch, the first price was about $4, although it turned out to reach a high of $4.7.
Within only 20 minutes, however, the price had already dropped below $1.4, making it clear that the initial price of $4 was not really significant.
In fact, the airdrop went a bit slow, due to the huge volume of requests that came in all at once at the time of the launch on the Arbitrum Foundation website.
In reality there was also another way to get them, much more difficult and risky but certainly faster, whereby a limited number of tokens could be received and put on the exchanges immediately.
Instead, when the big wave of sales of the tokens received through the Arbitrum Foundation site came after a few tens of minutes, the price inevitably fell, since demand at that point could also have been falling due to the sudden loss in value.
The low was touched about an hour and a half after the launch, just below $1.1, but it later rebounded by practically 30%.
In fact within an hour it was back to $1.4, which is also roughly the current value.
The price dynamics of the new crypto Arbitrum (ARB)
In other words, three distinct phases of the price trend of Arbitrum’s ARB token can be identified during the first day of trading.
The first phase, which lasted only an hour and a half, is the launch phase, during which a limited number of tokens were put up for sale as airdrop was slightly slow.
At this early stage the price dropped, but probably only because the starting price was too high.
Since it lost 76% of its initial value very quickly at this stage, it is more than plausible that the initial value was simply overly optimistic.
It was most likely due only to a temporary shortage of supply, such that as soon as the supply increased thanks to the tokens that were gradually being released by airdrop, the price dropped to a level more in line with the next one.
The second phase was even faster, because it lasted only an hour, and was characterized trivially by a rebound from the excessive descent of the first phase.
It should be noted that this bounce ended almost exactly on the next price level.
In fact, during the third phase, which is still ongoing, the price stabilized and simply continued to lateralize around $1.4.
In other words, this is probably the price to be taken as a reference, while the initial price was merely the result of a temporary supply shortage.
The different loss rates
Today, looking at the different price aggregators, we can see that the percentage of loss shown regarding ARB’s first day of trading varies.
CoinMarketCap shows -88%, while CoinGecko shows -78%. CoinPaprika shows nothing, because it has not yet been 24 hours since launch, while Binance shows -89%.
The problem is really the initial price, because on different platforms it was different, since there was no official one.
In theory it would be better to take as a reference the initial price on the platform on which trading first started, and this would seem to be precisely Uniswap.
In fact on Uniswap the initial price of about $4 precedes by at least seven minutes the initial price on Binance of $11.1, which is also the initial price shown on CoinMarketCap.
CoinGecko, on the other hand, takes as its reference an initial price of $5 only one minute after Uniswap. and clearly shows how in the very first few minutes the price rose to $11.1.
Thus it would be better to take as the initial price the one on Uniswap of about $4, although, as mentioned earlier, this is too much affected by a temporary supply shortage to be considered meaningful.
This data generates the misconception that ARB yesterday debuted at a heavy loss in the crypto markets, when in fact it debuted with extraordinary strength. Indeed once it reached the price of $1.4, about two and a half hours after launch, the price stabilized and has remained stable until today.
So it would be incorrect to say that it debuted with a loss just because the initial price for an hour or so was “inflated” by a temporary shortage of supply.
In fact, that price is not a good indicator, since it was touched precisely during a time when there were not yet all the ARB tokens actually available in the market.
Instead, it would be better to take as a reference for analysis the price touched at the time when the supply shortage was resolved, i.e., about an hour after trading began. Not surprisingly, that price was then maintained for an entire day.
Thus ARB’s crypto market debut was by no means negative, but neither was it particularly positive.
It is a neutral debut, but nonetheless very significant given that many people yesterday competed to sell ARB tokens as soon as they received them for free.