Altcoin Rally Dims Amid $650 Millon Token Unlocks' Impact

Altcoin Rally Cools as Massive $650M Worth of Token Unlocks Loom Over Crypto Market


323 Listen to this article Source : CoinDesk Several major alternative cryptocurrencies, including native tokens of dYdX (DYDX), Optimism (OP), […]

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Source : CoinDesk

Several major alternative cryptocurrencies, including native tokens of dYdX (DYDX), Optimism (OP), and Sui (SUI), experienced significant price drops on Monday. These price declines were attributed to substantial token unlocks that increased the available supply of these cryptocurrencies. This drop occurred amid a generally negative day on the broader cryptocurrency market.

According to data from Token.Unlocks and CryptoRank, altcoins were poised to see an influx of nearly $650 million in their supply throughout the week. Token unlocks refer to the release of coins from a vesting period, including those allocated to early investors. Such events typically result in price declines due to the sudden surge in supply surpassing the existing investor demand for the asset. A study by crypto analytics firm The Tie earlier this year confirmed this phenomenon.

Here are the key details of the cryptocurrency token unlocks:

  • dYdX (DYDX): This cryptocurrency was expected to witness the addition of approximately $480 million worth of tokens to its circulating supply, nearly doubling the current amount available in the market. As a result, DYDX experienced a 7% price decline in the 24 hours leading up to the release scheduled for December 1st.
  • Optimism (OP): OP’s value declined by nearly 6%, with a $40 million token unlock event looming on November 30th.
  • Sui (SUI): SUI saw a substantial drop of 8.8% in its price during the day due to its supply increasing by $48 million over the course of the week.
  • Axelar (AXL): Axelar faced a 10% price decrease in the past 24 hours as approximately $18 million worth of tokens, equivalent to about 5% of its market capitalization, were added to its supply on Monday during its scheduled monthly token unlock.
  • Immutable X (IMX) and 1inch (1INCH) and Hedera (HBAR) also had significant token unlocks scheduled in the coming days, which contributed to the overall negative sentiment in the market.
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Frequently Asked Questions (FAQs):

What are token unlocks in the cryptocurrency market?
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Token unlocks refer to the release of cryptocurrency coins from a vesting period, often including those allocated to early investors. These events can lead to an increase in the available supply of a cryptocurrency.

Why do token unlocks typically lead to price declines?

Token unlocks often result in price declines because the sudden increase in supply outpaces the existing demand from investors, creating an imbalance in the market.

Which cryptocurrencies experienced significant price drops due to token unlocks mentioned in the article?

DYDX, OP, SUI, Axelar (AXL), Immutable X (IMX), 1inch (1INCH), and Hedera (HBAR) all faced price declines as a result of scheduled token unlock events.

How much additional supply was expected for DYDX, OP, and SUI?

DYDX was set to add approximately $480 million worth of tokens, OP had a $40 million token unlock, and SUI’s supply was due to increase by $48 million over the week.

Why is it important for cryptocurrency investors to be aware of token unlock events?

Understanding token unlock events is crucial for investors as they can significantly impact the price and market dynamics of a cryptocurrency, potentially leading to both buying and selling opportunitie

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