Why did the PENGU token face sell pressure worth hundreds of millions of USD immediately after the TGE? What caused the massive sell-off!?
Immediately after the airdrop was made available to Pudgy Penguins NFT holders, the PENGU token saw a sharp decline of over 50% within the first four hours of trading. Upon launch, the token price rose to $0.068 but quickly dropped to $0.031 due to intense selling pressure from those who received the airdrop.
PENGU 5-Minute Chart on Dexscreener. Source: Dexscreener
A total of 15.18 billion PENGU, equivalent to 17.1% of the total supply, was claimed by approximately 775,700 wallet addresses. However, the current number of holders has dropped to just 382,700, indicating a significant sell-off of tokens shortly after the project enabled token claims and trading on exchanges.
Total PENGU Tokens Claimed to Date. Source: Flipside
During the peak period from 8:00 PM to 12:00 AM on December 17, the token claim volume saw a sharp increase, with over 2.4 billion PENGU claimed per hour. The number of participants claiming the airdrop also peaked at 160,000 during this timeframe before gradually declining afterward.
Token Distribution of PENGU by Quantity. Source: Flipside.
Data on token distribution shows that the majority of users received small amounts: 63% claimed between 1,000 and 5,000 PENGU, 18% received between 5,000 and 10,000 PENGU. Only a very small percentage, less than 2%, received more than 50,000 PENGU. This indicates that tokens are primarily distributed among small-scale holders, leading to early profit-taking behavior and creating significant selling pressure on the market.
The majority of users claim and sell their entire PENGU holdings immediately. Source: Flipside
Post-airdrop behavior shows clear diversification: 50% of users chose to hold their tokens, 30% sold immediately on decentralized exchanges (DEX), and 20% moved their tokens to centralized exchanges (CEX). Although over half of the claimed tokens have not been sold, the selling pressure from the remaining group has still dominated the market, causing PENGU's price to drop by more than 50% from its peak.
PENGU token trading data. Source: Flipside
The trading data during the peak hours from 8:00 PM to 12:00 AM on December 17 reveals that selling significantly outweighed buying:
Over 2 billion PENGU were sold per hour.
A total of 111,000 sellers compared to 59,000 buyers, indicating substantial selling pressure driven by profit-taking.
Among the top 1,000 claimers, 35% sold their entire claimed tokens, while only 30% chose to hold onto all their received tokens.
Actions of the Top 1,000 Wallets Holding the Largest Amounts of PENGU Tokens. Source: Flipside.
Not only has the PENGU token been negatively impacted, but the floor price of the Pudgy Penguins NFT collection has also experienced a sharp decline. The NFT's floor price dropped from 33 ETH to 16 ETH, losing half of its value. As a result, Pudgy Penguins has fallen to third place in the NFT market capitalization rankings, making way for Bored Ape Yacht Club, which maintains a floor price of 18.89 ETH.
Pudgy Penguins NFT floor price drops significantly following the PENGU airdrop. Source: CoinMarketCap.
The PENGU airdrop recorded a trading volume of over $425 million within the first 4 hours. However, rapid profit-taking sentiment and a lack of confidence in long-term growth prospects have driven both the token and the Pudgy Penguins ecosystem into a downtrend.
Thus, Pudgy Penguins has not escaped the common pattern observed among major NFT projects when launching their tokens. Previously, NFT projects like Milady Maker, DeGods, and BAYC experienced similar declines in both token and NFT prices in the short term.
$PENGU 🤝