This week could be a major turning point for the altcoin markets. According to data released by TokenUnlocks, $498 million worth of tokens will be unlocked in the next seven days. This situation is creating great curiosity and concern among crypto investors and analysts. Token unlocks in the market can affect the supply-demand balance and lead to price fluctuations. So, what are the details of this major unlocking operation and what risks could investors face during this process?
In the altcoin world, token unlocks are a system that usually requires token holders to keep their tokens locked for a certain period of time after investing in a particular project. These locked tokens are released over time to increase investors’ confidence in the project and prevent sudden selling pressure. However, unlocking can cause a sudden increase in supply in the market, which can lead to a price drop.
According to TokenUnlocks data, a significant amount of tokens will be released this week with two different unlocking methods: Cliff and linear unlocking methods. These methods have major differences in how tokens are released and their impact on the market. The Cliff method refers to the simultaneous release of all locked tokens on a specific date. This means that a large amount of tokens enter the market and can often lead to sudden changes in prices. This method can create selling pressure, especially in projects that are sensitive to volatility.
The linear unlocking method offers a more balanced and sustainable strategy. In this method, tokens are released gradually over time, allowing the market to absorb the increase in supply more smoothly. The linear method is seen as having the potential to create less volatility given the current market situation.
According to the TokenUnlocks report, projects that will release large amounts of tokens via the cliff method this week include ARB, AXS, EIGEN, STRK, APE, PIXEL, ADA, and PRIME. ARB (Arbitrum) is particularly notable; approximately $51.04 million worth of ARB tokens will be released this week, corresponding to 2.65% of ARB’s circulating supply. This has the potential to put serious pressure on ARB prices.
Additionally, $43.40 million worth of AXS (Axie Infinity) tokens will be unlocked, representing 6.08% of the supply. Axie Infinity has lost popularity recently, but it still has a large investor base. However, this unlocking could lead to short-term price fluctuations. Similarly, $40.05 million worth of EIGEN tokens are expected to be released, representing 6.01% of Eigen’s supply, a development that should be followed closely.
Tokens to be Unlocked with Linear Method
Tokens that will be unlocked this week via the linear unlock method include WLD, SOL, TAO, AVAX, SEI, NEAR, DOT, DOGE, SUI, FIL, BEAM, and ARKM. Due to the nature of the linear method, these tokens will be released gradually over time, preventing a sudden supply surge. However, this does not mean they are completely risk-free.
The most notable linear unlock will be the release of approximately $85.25 million worth of WLD tokens. At least 7% of WLD’s total circulating supply will enter the market this week, which could put some pressure on WLD’s value. Apart from that, $79.21 million worth of SOL (Solana), $33.86 million worth of TAO, $20.80 million worth of AVAX, and $17.38 million worth of SEI tokens will be unlocked. Given that these projects are major players in the market, the impact of the tokens that will be released on the markets should be monitored carefully.
Potential Impacts on Markets: How Will Altcoin Prices Be Affected?
Unlocking a large amount of tokens naturally leads to an increase in supply. According to economic theories, when increased supply is not balanced by demand, it puts pressure on prices. This increases the potential for cliff unlocks to cause major volatility. Sudden increases in supply can cause panic selling by investors, which can lead to sharp price drops.
However, this process may yield different results depending on the projects and investors’ reactions to the developments. Although linear unlocks provide smoother transitions, they have the potential to create pressure on the market in the long term. Although a large amount of tokens released gradually may not cause the market to shake in the short term, it can trigger downward movements in prices in cases where demand is insufficient.
Investors can help protect their gains by paying attention to factors such as token unlock rates, market supply and demand balance. This week may be tough for altcoins, but with the right strategy, this process can be turned into an advantageous situation.
