Token Unlocks in the Cryptocurrency Market

Over the next 30 days, over 40 crypto protocols will undergo more than $740 million worth of token unlocks.

The cryptocurrency landscape will have a significant event over the next 30 days as more than 40 crypto protocols, including well-known names like Arbitrum, Optimism, Starknet, and Aptos, will release over $740 million worth of tokens. This release involves locked tokens, a common practice to prevent early investors and team members from selling off their holdings too quickly.

Leading this wave of unlocks is the XaI protocol with its XAI token, which will see approximately $109 million worth of tokens enter circulation. Aptos is not far behind, planning to unlock $85 million worth of APT tokens. Arbitrum follows with an $80 million unlock of its ARB tokens. Other significant unlocks include Immutable with $53 million in IMX tokens and the OP Mainnet with $61 million worth of OP tokens. Sui and Starknet will also release substantial amounts, unlocking $58 million and $52 million worth of SUI and STRK tokens, respectively. Moreover, Ethena plans to unlock $37 million in ENA tokens.

These token releases are crucial for the projects involved as they transition into their next phase of development and market integration. Kelly Ye, a portfolio manager at Decentral Park Capital, emphasizes the importance of tokenomics design and unlock schedules in determining a project’s success. Essentially, how these tokens are phased into the market can significantly impact the project’s stability and long-term viability.

Market Dynamics and Price Impacts

Token unlocks are not rare in the cryptocurrency world but can lead to increased volatility. Just last month, the Pyth network released $736 million worth of tokens, and the Avalanche network added about $369 million worth of tokens to the circulating supply. These events often lead to price movements as the market anticipates the increased supply.

The broader market context shows that the largest cryptocurrencies by market cap, bitcoin and ether, have both declined approximately 4% over the past week. However, the cryptocurrencies undergoing unlocks have generally experienced steeper declines. XAI, which is bracing for the largest unlock, has dropped 20% in value over the last seven days. Similarly, STRK has seen a decrease of about 27% in the same timeframe. On the lighter side, APT’s price fell by 8.4%, while ARB saw an 8.9% decrease, according to data from CoinGecko.

The impact of these unlocks on token prices varies and largely depends on current market sentiment, trading volume, and the particular circumstances of each token. The anticipation of these events can lead to early price adjustments as traders and investors prepare for the potential increase in supply.