The altcoin market is experiencing an early “crypto winter” as early investors and founders of various projects sell off their tokens.
According to a recent report by Bloomberg on June 24, this decline can be attributed to a range of factors, including token unlocking by venture capitalists (VCs) and founders holdings, as well as selling pressure due to the correlation between altcoins and main network tokens.
Altcoin market affected by wave of token unlocking
As the cryptocurrency market recovers from the last two-year decline, many project tokens have reached their unlock date this year. According to the report, venture capitalists and founders who received these tokens in exchange for investments or work contributions now have the opportunity to sell them.
Of the 138 tokens tracked by researcher Token Unlocks, 120 are scheduled to be unlocked this year, with a total market value of about $58 billion.
Anticipated selling from unlocking VCs has resulted in a negative price reaction as non-VC holders attempt to sell in response to selling pressure, often resulting in deep discounts to spot prices.
The price performance of altcoins such as DYDX, Avalanche (AVAX) and Pyth (PYTH) has been significantly impacted by token unlocking. The DYDX token price has more than halved since mid-March, while AVAX and PYTH have also seen significant price drops. These three tokens were scheduled to unlock in May, increasing selling pressure.
Token unlocking, which previously helped drive 2023 prices, is now receiving more attention from both VCs and public participants, prioritizing short-term profits over long-term holdings of tokens. with altcoins having an unlock date.
Liquidity crisis?
Notably, since March 14, when Bitcoin (BTC) reached an all-time high of $73,700, only 12 out of 90 altcoins recorded positive returns, while 81 assets recorded negative returns. , according to the report.
Bitcoin is down about 12% since its peak, and most of the top 100 tokens are down more than 25%.
Smaller altcoins, including those correlated to major network tokens such as Ethereum (ETH) and Solana (SOL), often sell off before a decline occurs. Token unlocking exacerbates this selling pressure, further affecting the altcoin market.
According to Bloomberg, the current market presents challenges for infrastructure projects funded during a bear market.
When these projects launch their tokens, there is limited demand from “regular buyers” at high prices. The altcoin market is currently characterized by a lack of liquidity and a surplus of tokens being unlocked, leading to downward pressure on prices.
Source: https://tapchibitcoin.io/mua-dong-crypto-den-som-voi-thi-truong-altcoin-khi-cac-nha-dau-tu-ban-thao-bloomberg.html
