Business

Fact or Fiction? Has ApeCoin (APE) Really Down 80% Since Launch?

ApeCoin (MONKEY) the governance token of the well-known NFT project Bored Ape Yacht Club (BAYC) was airdropped on March 17 at 8:30 a.m. EST to the owners of BAYC and Mutant Ape Yacht Club (MAYC) in just eight hours, after APE became tradable in the open market, it has already jumped to the 110th place among the most traded tokens in CoinGecko’s ranking, with a total trading volume of $900 million across all tracked platforms.

As might be expected, there was some volatile price action minutes after the airdrop, and headlines show that APE’s price has fallen by 80% since its launch. This raises the question of whether the common BAYC and MAYC owner could have sold APE for $40 instead of $14 for which it is trading at the time of publication.

Let’s take a look at the price of APE minutes after the airdrop was claimed and the token was listed on Binance, FTX, Gate, and SushiSwap to assess the magnitude of the price differences during the early price discovery periods.

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ApeCoin Spot 1 minute chart. Source: FTX

The spot price chart above shows that APE on the FTX one-minute chart traded as high as $40 in the second minute, but the perpetual price chart below shows that it only rose as high as $15 in the first minute at its highest Period.

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ApeCoin 1-minute perpetual chart. Source: FTX

Binance is peaking at $28 from the one-minute chart in the minute of the airdrop, while Gate is showing a staggering $214 in the same minute.

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APE/USDT 1 minute chart. Source: binance
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APE/USDT 1 minute chart. Source: goal

While the price of newly listed tokens is often volatile during initial pricing periods and it is difficult to know if transactions have actually occurred at these levels, the volumes of these tiny candles can give a good indication of what the actual price of APE was after the airdrop.

Binance’s trading volume is the highest among the three platforms used in this article and the reader should know that APE is also traded on other platforms. In the first five minutes, Binance’s total trading volume was $42 million, while FTX Perpetual’s total trading volume is $18 million and cash volume is $6 million. Gate only has $1,665 trading volume on the candle, showing the highest price of $214 and only $43,000 total volume in the first five minutes.

So it is clear to see that the more reliable price is from APE minutes after the airdrop from Binance which is around $28 and happened the minute of the airdrop. It is not uncommon for the newly launched tokens to experience a large price drop in the early hours of trading, as has been the case for many similar tokens. The question is whether an ordinary, non-technical owner could have sold the token in the first five minutes to avoid such a drop. The answer is almost certainly no.

First, the gas price for minting APE shot up to 10 times (or even more) the normal price right after the airdrop. Unless you’re willing to take big risks and raise the price of gas to put the APE ahead of everyone else (and remember that the APE price is probably nowhere to be found at this point), it’s very difficult to get APE inside to claim a minute at all .

Second, once APE is in the recipient’s Ethereum wallet, it must be transferred to centralized exchanges (CEXs) such as Binance and FTX in order to be sold. Depending on the current traffic on the chain, this also takes some time. The quickest way would be to use a decentralized exchange (DEX) by simply plugging in the Ethereum wallet and exchanging APE for another token.

However, an interesting observation is that the liquidity of APE in DEX is not as high as in CEX. At the time of writing, the TVL on Uniswap is relatively low for APE/USDC and APE/DAI pools, and liquidity on SushiSwap is very low – the total locked value (TVL) in the APE/USDT pool is only $67,000 .

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APE Liquidity Pool as of March 17. Source: Uniswap
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APE/USDT Liquidity Pool as of March 17. Source: SushiSwap

BAYC owners can claim approximately 10,000 APE per NFT and MAYC owners can claim approximately 2,000 APE per NFT. This means only 80 BAYC owners can swap the entire airdrop at a price of $28 given APE/USDC’s $45 million TVL on Uniswap.

No BAYC owner can swap the entire airdrop on SushiSwap for USDT as the $67K TVL cannot cover 10K APE swaps per BAYC or the 2K APE per MAYC priced at $28.

Given the lack of liquidity in the DEX and the time it takes to transfer APE to a CEX like Binance, it is almost impossible for a regular owner to withdraw in the first minute or two at the top. It seems that only tech-savvy owners (or bots) who know how to interact directly with the blockchain with code can perform these types of transactions in such a short amount of time.

Even if the $40 price is right and APE has fallen 80% from there to $8, very few have been able to sell APE at that price. A more reasonable way to look at the initial price of a newly launched token is to use the USD volume traded within a minute divided by the volume of the token. In the case of Binance in the first minute, the total USDT volume is 19.66 million and the total APE volume is 2.15 million, giving an average price of $9.14 in the first minute for APE.

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APE/USDT volume in the first minute. Source: binance

With this fairer view of APE’s price immediately after launch, the token has actually only fallen 12% since its peak, which is not overly dramatic given the current bearish environment. Next time investors read headlines such as the token price falling 80% on the first day, take it with a grain of salt.

With Yuga Lab’s future plans to use APE for all its products and services, and collaborating with Animoca Brands to develop blockchain NFT games, the future prospects for APE and the NFTs-based Web3 economy could be very interesting.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.