So, we are witnessing a massive surge in the Sui token, but I wouldn't get too excited just yet.
Why is that? Many compare Sui to Sol.
However, Sui has one significant issue: token issuance.
Here, we see Sui's supply at 10 billion compared to Sol's 585 million.
Additionally, only 2.8 billion of Sui's 10 billion supply is currently unlocked.
In contrast, Sol has 499 million unlocked coins out of 588 million.
Sol is 85% unlocked, while Sui is only 28.5% unlocked.
The next Sui token unlock will take place on December 3.
After that, we can expect unlocks every month
The unlock will amount to $308 million, based on the current price, which is actually a very large sum.
Some projects have such a market capitalization.
The total investment in the project is $385 million, while one unlock in December alone amounts to $308 million.
Well, let’s take a look at whether the token's price dropped in previous months during unlock events.
How much were people willing to hold onto the token?
This is a very important factor in determining how much holders are willing to keep their tokens.
Or are they simply ready to receive their tokens during the unlock and sell them to you at any price?
So, I looked at the unlock events from September to November, and the results weren’t very reassuring.
On the unlock day, which happens every month on the 3rd, the tokens were simply dumped onto the market.
Here is the daily chart.
There was also recent news that a trust for Sui has been launched.
However, if you visit the Grayscale website, you'll see that they have launched trusts for many tokens.
So, there's nothing new about this.
The question is different: will investors want to enter these trusts knowing that every month there will be a massive token unlock flooding the market?
Conclusion
What do I expect from the Sui project?
Sui is definitely a good project, but its massive uncirculated token supply is hindering its progress.
Moreover, we will also face a bear market during the unlocks.
Currently, it outperforms many other projects in different areas.
I’ve seen something similar with Arbitrum.
Remember how much hype there was around Arbitrum?
Its price also rose, but how did it end?
Arbitrum is now at the bottom.
A huge uncirculated token supply is a problem for all L1 projects.
Even Binance mentioned the issues with FDV (Fully Diluted Valuation) for such tokens in one of their articles.
I remember how last year, around this time, everyone was excited about the Tia project.
Tia did grow, but its massive supply also dragged the project down, and now everyone has forgotten about it.
We must also remember that there is fierce competition in the market, and new projects are launched every day.
Not every investor will want to have their money unlocked by someone else.
Wishing everyone successful trading, and most importantly, think with your own head and don't let emotions take over.
Also, if you don’t mind, please leave a like.
If this article gets a lot of likes, I might release an article about Bitcoin.
