The cryptocurrency market is bracing itself for a significant event – the unlocking of approximately $500 million in various cryptocurrencies. This development has the potential to impact market prices, especially considering the increased supply of tokens.
Unlock Schedule and Details
Over the next seven days, nearly $80 million worth of Worldcoin’s WLD, $51 million in Arbitrum’s ARB, and nearly $40 million each of Eigenlayer’s EIGEN and Axis Infinity’s AXS are set to be released. TokenUnlocks data highlights these figures.
Unlock Highlights
- Worldcoin (WLD): 37 million tokens will be distributed to team members, advisors, and investors, representing a 7% increase in the token supply.
- Arbitrum (ARB): $51 million worth of tokens will be released as part of an ongoing ‘linear’ plan, where tokens are emitted and absorbed by the market.
- Eigenlayer (EIGEN): nearly $40 million worth of tokens will be unlocked, representing a 6.01% increase in supply.
- Axis Infinity (AXS): similarly, nearly $40 million worth of tokens will be released, accounting for a 6.08% increase in supply.
Market Reaction and Historical Trends
Historical data suggests that significant price changes might occur on average two weeks after the unlock. This phenomenon is attributed to various factors, including investors’ anticipation of token receivers selling their newly unlocked tokens.
Unlock Patterns and Market Impact
While unlocks increase the total available supply of a certain token, it doesn’t necessarily hit the open market immediately. However, the anticipation of investors or traders expecting token receivers to sell their newly unlocked tokens can lead to a preemptive sell-off, reducing the token price before or as the tokens are unlocked.
A 2023 research from TheTiesuggests that most losses from unlocks typically arise after an average of two weeks from the event. However, if the market perceives the unlock as a sign of project progress or the tokens are expected to be used for staking governance or other utility purposes that do not involve immediate selling, the price might remain stable or increase due to positive sentiment.
Conclusion
The upcoming token unlocks have the potential to impact market prices due to increased supply. Investors and traders should be aware of historical trends and anticipate potential preemptive sell-offs. The outcome will depend on various factors, including market perception and the intended use of unlocked tokens.
Additional Insights and Considerations
- A ‘cliff’ – or a colloquial term for a large number of tokens released in one go – is set to occur with a total value of $200 million. This event may have a more significant impact on market prices.
- Solana’s SOL will see $80 million worth unlocked as part of an ongoing ‘linear’ plan, where tokens are emitted and absorbed by the market.
- Token unlocks increase the total available supply of a certain token but don’t necessarily hit the open market immediately.
Recommendations for Investors and Traders
In light of these developments, investors and traders should exercise caution and closely monitor market trends. A well-informed approach will be essential in navigating the potential impact of token unlocks on market prices.
Sources and References
- TokenUnlocks data
- TheTies 2023 research
