TL;DR
- $500 million worth of tokens released this week could create selling pressure.
- Arbitrum (ARB) and Worldcoin (WLD) will see a significant increase in their circulating supply.
- Unlocks are usually bearish events, although they can be viewed positively as progress on projects.
In the coming week, the cryptocurrency market is bracing for a wave of token unlocks that could have a significant impact on prices.
Approximately $500 million in various digital assets will be released, increasing the available supply in the market according to official data from TokenUnlocks.
🔓 Weekly Cliff Unlocks : 14 Oct – 20 Oct '24 🔓
🔥 $ 214.33m+ 🔥
🌟 Unlock Highlights 🌟$ARB (2.56%) – $48.97m$EIGEN (6.01%) – $41.40m$AXS (6.08%) – $41.55m$STRK (3.30%) – $25.00m$TAIKO (15.00%) – $18.24m$APE (2.31%) – $10.86m$PIXEL (7.05%) – $6.80m
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( % of cir.… pic.twitter.com/6IWCFWztvE— Token Unlocks (@Tokenomist_ai) October 11, 2024
This phenomenon, which affects tokens such as Arbitrum (ARB), Eigenlayer (EIGEN), and Worldcoin (WLD), is anticipated to be a potentially bearish event, as the increase in supply may induce investors to sell their assets.
It is important to note that although unlocked tokens are primarily distributed to team members and advisors for the development of the ecosystem, market perception of this phenomenon can lead to price movements before the tokens actually hit the open market.
One of the most notable cases is Worldcoin, which will see over $80 million unlocked, representing a 7% increase in its total supply.
These tokens were originally intended for a three-year lock-up period, but this was extended to five years in July.
This decision reflects a more conservative strategy to control the inflation of the currency in circulation.
On the other hand, Arbitrum also stands out with an unlock of approximately $51 million.
The combination of these releases, along with others such as Eigenlayer and Axie Infinity, which will also see significant unlocks, raises the possibility of selling pressure in the near term.
Implications of Increasing Cryptocurrency Supply
Token unlocks are generally perceived as bearish events.
The reason behind this lies in the fact that an increase in the supply of tokens can, in theory, destabilize their price if demand is not adequately adjusted.
Anticipation that new token holders might sell their assets may trigger a sell-off, leading to prices falling before or during the unlock.
A study conducted by TheTie in 2023 revealed that most losses related to unlocks usually occur, on average, two weeks after the event.
However, the market reaction is not always negative.
If investors perceive unlocks as a sign of progress in the project, or if the released tokens are used for purposes such as staking or governance, there could be a stabilizing effect on prices.
In such cases, positive sentiment could counteract the initial selling pressure, maintaining the value of assets or even causing them to rise.
With a variety of assets in play and a changing market environment, it will be crucial for investors to closely monitor how these unlocking events unfold.
As the week progresses, market attention will focus on the actual impact these unlocks will have on the value of the tokens and how market participants will decide to react to this new offering.
