Why Solana’s Jupiter Token Sank 70% Post Exchange Listings

In a surprising turn, Solana’s Jupiter DEX Token drops 70% following its recent listings on major exchanges.

Solana Jupiter sinking into the bottom of the ocean and diver swam towards it to see.
Created by Kornelija Poderskytė from DailyCoin
  • JUP token’s value drops 70% after exchange listings.
  • One billion tokens were airdropped to the community.
  • The Solana ecosystem was affected by JUP’s high volume.

The decentralized finance (DeFi) ecosystem, particularly within the Solana network, has been a focal point of innovation and investor interest. Platforms like Solana’s Jupiter decentralized exchange have been instrumental in advancing these technologies. 

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However, the recent listing of Solana’s Jupiter DEX Token (JUP) on multiple exchanges has led to an unexpected shift. Instead of surging in value, which is the typical market reaction, the token dropped 70% post-listing.

The Unexpected Market Shift of Solana’s Jupiter Token

In the world of cryptocurrency, listing a new token on exchanges is often seen as a pivotal moment, potentially leading to increased liquidity and investor interest. However, the recent listing of Jupiter DEX Token (JUP) on Binance and Bitfines has taken an unexpected turn.

Jupiter token price movements in the past 7 days.
Source: Coinmarketcap

On Wednesday, January 31, shortly after its listing, JUP experienced a dramatic 70% drop in value, sending ripples through the Solana ecosystem. This decline is noteworthy, considering the anticipation and initial enthusiasm surrounding the token. 

Why Solana’s Jupiter JUP Token Sank After Exchange Listings

The likely reason for the decline was the airdrop of a significant number of token’s total supply. Of the 10 billion tokens in circulation, 4 billion will go to the community. The tokens will be distributed over four annual airdrops, starting January 31st each year. 

The initial airdrop distributed 1 billion tokens, equivalent to 10% of the total supply, contributing to the steep decline in the price of JUP tokens. The airdrop value is even more significant compared to the total circulating supply. 

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After the first airdrop, the token’s circulating supply was just 1.35 billion, meaning that most of the token’s circulating supply was given away to the community. Such large-scale distributions often lead to an immediate increase in the token’s circulating supply, which can exert downward pressure on its price. 

In this case, many recipients opted to sell their tokens quickly to realize immediate gains. This has led to increased selling pressure in the market, contributing to the 70% drop in price. 

Solana Network’s Performance During the Airdorp

The Solana network experienced significant activity with the launch of Jupiter’s JUP token. For one, Jupiter’s airdrop contributed to a $1 billion trading volume within just 3 hours, demonstrating substantial market interest.

The network efficiently handled 2.5 million non-vote transactions in 2.5 hours, averaging 1 million transactions per hour, showcasing its high throughput capabilities. There was a temporary drop in transactions per second (TPS) from 2100 to 568 during the initial 30 minutes of the airdrop. Still, it swiftly recovered to 2200 TPS within 2 hours, indicating the network’s high-demand resilience.

Notably, the Solana network faced no issues with validator failures or lost transactions during this period.

On The Flipside

  • While the $JUP token launch generated significant transaction activity on the Solana network, it did not directly influence the price of Solana’s native token, SOL. Solana dropped 2% following JUP’s launch to $95.97.
  • The influx of users claiming their $JUP tokens led to high transaction activity on the Solana network, causing network congestion. However, the network quickly recovered. 

Why This Matters

Understanding this price movement is essential for investors and participants in the crypto market, offering insights into market trends, investor behavior, and the risks associated with trading newly listed tokens.

Read more about the altcoin performance on Solana: 
Solana Whales Flip $82M SOL As Top Altcoins Regain Momentum

Read more about Solana’s Saga phone performance: 
80% of Solana Phones Set Up Crypto Features: Where Did 20% Go?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.