The booming altcoin market, akin to a frigid winter in the crypto landscape, is bearing witness to an accelerating fire sale. Early bird investors and project
The
altcoin market continues to observe a sell-off, with early investors and project founders quickly selling their
tokens. This sell-off is largely attributed to the unlocking wave of
tokens held by venture capitalists (VCs) and founders. According to recent analysis from Bloomberg, the sell-off can be attributed to several factors, including the unlocking of
tokens held by venture capitalists and founders, and the persistent selling pressure fueled by the close correlation between
altcoins and dominant network
tokens. As the
crypto market recovers from the steep downturn observed two years ago, several project
tokens are meeting their unlocking deadlines this year. These
tokens, typically received by VCs and founders in exchange for investments or labor contributions, are now becoming available for sale. Out of the
138 tokens being monitored by TokenUnlocks researchers,
120 are set to unlock this year. Together, these
tokens have an approximate total market value of
$58 billion**. This potential wave of selling from VCs has sparked a sequence of downside price reactions from non-VC holders. Faced with pressure to sell early, they often end up selling at a significant discount. The impact of token unlocks is evident in the price performance of DYDX, Avalanche (AVAX), and Pyth (PYTH). Since mid-March, the token price of DYDX has more than halved, while AVAX and PYTH have also recorded steep declines. Notably, all three **tokens** were set to unlock in May, which amplified the selling pressure. Earlier in the year, these token unlocks were hailed as a key driver for surging prices in **2023**. However, the focus shifted to VCs and public participants prioritizing short-term profits, leaving **altcoins** with unlocks later in the year unattended. From March **14**, when Bitcoin hit a high of **$73,700, only
12 of the top
90 non-stablecoin assets tracked on centralized exchanges yielded positive returns, while
81 recorded negative returns. Bitcoin has fallen about
12% from its peak, and most of the top
100 tokens have recorded a downturn of over
25%. In a downmarket, smaller
altcoins, especially those closely correlated with major network
tokens like Ethereum (ETH) and Solana (SOL), tend to feel the impact first. The selling pressure from token unlocks adds to this effect, sending shockwaves through the
altcoin market. Bloomberg highlights the challenges faced by infrastructure projects that emerged during the bear market phase. As these projects release their
tokens, there might be a lack of demand from retail buyers at higher price levels, considering the
altcoin market is awash in
tokens awaiting unlock. This dynamic contributes to a downward spiral, with prices being dragged down. Overall, the total
crypto market capitalization has decreased and now stands at
$2.19 trillion.
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