OMG, the native token of Layer-2 scaling protocol for Ethereum offering faster and cheaper transactions, crashed on Friday.
The cryptocurrency fell 27% to $12.7 as exchange inflows spiked in what appeared to be a classic “sell the fact” reaction to Boba Network’s completion of a snapshot for an airdrop, or free BOBA coins, to OMG holders.
OMG hit its lowest price since Oct. 28, and moving below the 50-day moving average (MA) support after 3.5 months, CoinDesk 20 data shows.
Blockchain data shows investors transferred coins to exchanges in large numbers early today, possibly to liquidate holdings.
Centralized exchanges registered a net inflow of 5.7 million OMG tokens on Friday- the largest influx on record. Increased transfer of coins to exchanges represents investor intention to sell, while continued outflow is a sign of solid holding sentiment.
The price sell-off and exchange inflows picked up the pace during Asian hours after Boba Network, a new layer 2 product created by blockchain developer Enya in collaboration with OMG Network, announced a snapshot – a polaroid record – of balances held by OMG holders on the Ethereum network and the Boba Network.
L1 Ethereum Snapshot Block: 13597967
L2 Boba Network Snapshot Block: 15354
We’re excited kickstart our community #Bobarians when the token drops next week, on Nov 19th.
— Boba Network ($OMG) (@bobanetwork) November 12, 2021
On Nov. 19, these recorded wallets will receive free BOBA governance tokens in proportion to their OMG holdings at the snapshot time.
The price drop comes after a strong rally that saw prices reach a three-year high of $20 earlier this month. The cryptocurrency picked up a bid near $6 last month as the lure of making free money from the impending Boba Network airdrop drew demand. OMG also benefitted from the broad-based rally in coins associated with Ethereum layer 2 projects and Ethereum alternatives like Solana, Polkadot.
The uptick in the lead-up to the airdrop snapshot and the subsequent sell-off is related to the “buy the rumor, sell the fact” trade often observed in stock markets and recently seen in bitcoin. The concept is based on the belief that market participants, being forward-looking, tend to buy an asset when expecting positive developments and take profit, driving the market lower on confirmation of the news.