$800M worth of tokens unlocked in December: Will dYdX, Sui and IMX prices fall?
With market volatility rising, investors are gearing up for a big month as several projects begin launching tokens. This increase in token supply may result in a temporary decline in the value of major altcoins such as DYDX, 1INCH, and Aptos.
Over $800 Million Invested in Altcoin Market
About $830 million in vested digital assets are scheduled to hit the market in December. The biggest release will be on decentralized exchange dYdX, which is set to unlock 150 million tokens reserved for investors, founders and employees. At current market value, this token is worth nearly $500 million.
According to a recent tweet from Lookonchain, Dydx plans to launch 150 million tokens on December 1, 2023. Of these, tokens worth $280.35 million will be released to investors. Additionally, other altcoins such as Immutable
Token unlock events result in an increase in asset supply as coins previously held during vesting periods are released, including coins for early investors. As a study conducted earlier this year by cryptocurrency analytics firm The Tie found, these significant unlocks often result in price declines because the surge in supply exceeds investor demand.
On December 1, decentralized finance protocol 1inch Network will release approximately 98 million 1INCH tokens, currently valued at approximately $33 million. Additionally, Aptos, a proof-of-stake blockchain project, is preparing a large token launch in December. Apecoin plans to unlock $25 million worth of tokens on December 17th.
Aptos plans to unlock about 25 million tokens worth about $180 million on December 12, according to the data. Additionally, Hedera plans to release $11 million worth of HBAR tokens on December 1, and Sui plans to unlock $41 million worth of tokens on December 3.
Bearish Reaction to Altcoin Prices
Several major altcoins, including the platform’s native tokens such as dYdX (DYDX), Optimism (OP), and Sui (SUI), experienced declines due to token unlocks. However, it is important to note that the expected negative impacts have not intensified during the unlocking of DYDX’s last token on October 31, 2023.
Token unlocking protects the project from immediate selling. But this also results in a steady influx of new supply into the market. There could be solid downward pressure if a large unlock event occurs. It is not uncommon to see prices fall further if supply increases follow normal selling behavior (e.g. liquidating positions before or after unlocking).
Of course, not all unlocked tokens are transferred with depreciation. It is recommended that you do thorough research on the basics of the project and its community before investing. However, for traders who focus on short-term strategies, knowing the unlock schedule can help them strategically plan their entry and exit points.