Chainalysis report revealed 24% of tokens launched in 2022 experienced a significant price decline within the first week of launch.
Almost a quarter of tokens launched in 2022 showed the characteristics of pump-and-dump (P&D) schemes, according to Chainalysis’ recent report.
Over one million tokens were launched in 2022 — but only 40,521 received enough traction to be worth analyzing, according to the report.
Of the 40,521 analyzed, 9,902 tokens experienced a significant price decline within the first week of their launch — accounting for 24% of all launched tokens.
Tokens launched in 2022 (Source: Chainalysis)
P&D schemes start with a well-promoted asset which often uses misleading statements that cause the price to increase, according to the report. After a sufficient level is reached, the holders sell their holdings at an overvalued price, causing the price to plummet. Therefore, the report considers significant price declines recorded soon after the token launch as a “telltale sign” of a P&D scheme.
25 largest first-week drops
With that being said, the report also acknowledges the possibility that the crash in price of the tokens might have resulted from market conditions. As such, the report examined 25 tokens that recorded the most significant price drops within the first week of their launch.
The results showed that these projects lacked trustworthiness — many containing “honeypot” coding that prevented new buyers from selling their tokens.
Data points to the same crowd
“In many cases, the same wallet provided initial liquidity for several tokens” that fit the report’s P&D criteria, the report stated. The data pointed to 445 unique wallets belonging to either individuals or groups — accounting for 24% of the 9,902 tokens that resemble P&D schemes.
“The most prolific” suspected P&D scheme creator the report identified launched 264 tokens in 2022 that were amongst the 9,902 tokens detected.
Emerging markets dominate Chainalysis 2022 Geography of Cryptocurrency Report
Chainalysis data reveals FTX collapse caused $9B in realized losses