I like to bike: My 1st guess is a ring snagged in a port. If tapping the piston with a hammer freed it, beware that a sliver of metal may now be rattling around in the crankcase. That's a bad thing, it can cause all sorts of damage to bearings, rings, piston skirt/cylinder walls, etc... If it were me, I'd remove the motor, the head, jug & piston, then rinse the crankcase out with 2stroke mixed gas several times to wash out any shavings. While its apart, check the cylinder lining, port edges, piston sides & rings. If any of the ring lands are damaged, its junk. It may still run, but not for long, 2 tanks and you'll have excessive blowby & poor ring seal. A new piston may be needed if the ring lands are damaged.
If everything checks out okay, order you some new gaskets, buy a Dremil & grinding attachments, & research porting, something you can do while you wait for parts to arrive. The google search bar at the top is an awesome tool for this, try to learn as much as you can before you go to reworking your ports for more power & speed. If you remove too much material you cannot put it back, and aluminum is very soft so be careful! And good luck.
Nikkinunyuh: Your problem sounds like dry rear wheel bearings. Brand new bike? Did you get it from Wally World? Lots of those are assembled by minimum wage laborers who haven't been trained properly or don't care enough to use any grease. Your best bet would be to buy a complete wheel from a reputible bike shop & swap out your ragjoint & sprocket. Just as a reminder to all reading this, YOU NEED TO REGREASE YOUR AXLES & BEARINGS EVERY THOUSAND MILES (8-10 tankfuls of fuel). Traditional bicycle wheels aren't designed to spin as fast or as long as a motorized bike, and therefore require additional maintenance if we want them to survive. High sustained RPMs will cook the grease out till the bearings are metal-to-metal, destroying the bearings, hub, and axle cones. In 3 years of motorbicycling, I have gone thru 2 wheels, 3 sets of bearings, & snapped an axle in half! Now, every 3 months I tear down my back wheel & repack my bearings so I don't end up with this again: