Raining Cryptos

I study the effect of hard forks and airdrops on cryptocurrency prices. At the hard fork and airdrop date, holders of the parent coin receive additional coins of a different cryptocurrency. The announcement of a hard fork or airdrop does not affect parent coin prices. In contrast, the distribution of coins immediately decreases the prices of the parent coin by 4.65%. The cumulative average abnormal return over the 5-day post-distribution date equals -12.29%. Importantly, I show that the price drop of the parent coin is significantly lower than the value of the distributed cryptocurrency. This suggests that hard forks and airdrops are partly free money.