Altcoin Rally Cools as Massive $650M Worth of Token Unlocks Loom Over Crypto Market
Crypto tokens DYDX, OP, SUI dropped sharply ahead of their large token unlocks, underperforming the broader Coindesk Market Index.
Unlocks increase a digital asset’s supply and allow early investors to sell tokens.
Several major alternative cryptocurrencies including native tokens of dYdX (DYDX), Optimism (OP) and Sui (SUI) dropped Monday as massive token unlocks weighed on prices amid a generally negative day on the broader crypto market.
Altcoins face almost $650 million worth of increase in their supply through this week, according to data from Token.Unlocks and CryptoRank.
DYDX will see roughly $480 million worth of tokens added to its circulating supply, almost doubling the current amount of tokens on the market. OP, SUI, Axelar (AXL), Immutable X (IMX) and 1inch (1INCH) and Hedera (HBAR) also have large unlocks scheduled in coming days.
Token unlockings translate to an increase in the asset’s supply, releasing coins from a vesting period including to early investors. Large unlocking events usually lead to price declines due to the supply increase outpacing investor demand for the asset, a study by crypto analytics firm The Tie found earlier this year.
Axelar (AXL) dropped 10% in the past 24 hours as about $18 million worth of tokens – some 5% of its market capitalization – were added to its supply Monday during its scheduled monthly token unlock, including to early investors, according to CryptoRank data.
DYDX was down 7% during the same period ahead of the release of $480 million worth of tokens on Dec. 1.
OP declined nearly 6%, with an unlock of $40 million in tokens looming on Nov. 30.
SUI plunged 8.8% during the day as its supply will increase by $48 million over the course of the week.
1INCH fell over 4% with its supply set to increase by almost 10%, or $33 million, on Dec. 1. HBAR and IMX endured 2%-3% declines with each facing $11 million tokens being unlocked this week.
Meanwhile, bitcoin (BTC) was down 0.7% during the same period, while the broad-market crypto index CoinDesk Market Index (CMI) declined 1.5%.