Many cryptocurrency projects have a long-term vesting schedule to increase their token’s circulating supply slowly. Those unlocks can bring more market liquidity, although that may have some exciting market consequences. Several big unlocks are coming up in the next week.
Slowly Increasing Token Supply
People familiar with tokens and altcoins will know the circulating supply and total supply are different creatures. Only some projects issue their entire supply from day one. Instead, users can either generate more tokens through mining, staking, airdrops, etc. However, most ventures have a capped supply much higher than the amount currently in circulation. A slowly increasing supply often decreases the token’s value, although exceptions exist.
Bitcoin has been a good exception in that regard. Its circulating supply goes up through mining, yet there aren’t too many coins in total. Things are often different for altcoins and tokens, which can have supplies in the hundreds of millions, billions, or trillions of tokens. As such, every token unlock inflates the supply further and may trigger negative market action.
GateToken (GT) is the biggest upcoming unlock, as its circulating supply will increase by 0.67%. That may seem like a small amount, but it’s an increase of over $32 million at current prices. That is 5% of the total market cap to be added to the overall supply. So it seems likely that unlock might upend the current $GT uptrend.
Another big unlock on the horizon is ECOx (ECOX), which is already struggling in the price department. Its circulating supply will increase by 2.68%, or $25.3 million, at current prices. Moreover, its circulation will virtually double, which may trigger further price dips. Axelar’s 2.49% supply unlock ($18 million) is also significant, representing 15% of the current market cap being added in the next few days.
Other Notable Token Unlocks
While the unlocks by GateToken, ECOx, and Axelar are potentially impactful, one should pay attention to issuance changes by Flow, Illuvium, Certik, and Coin98. All assets will unlock at least $10.5 million in one day, changing supplies by 1.06%-6.31%. Particularly the CTK unlock will inflate the supply quite a bit, which may trigger volatile price action. Token unlocks may be exciting for those waiting for a dip, but investors and holders dread these moments.
For now, it remains unclear what will happen to the crypto markets. Several tokens with upcoming unlocks are under pressure already. That may indicate the upcoming supply changes aren’t “locked in” yet. Anything can happen to these assets above, or the market may enter sideways accumulation mode. It is hard to predict traders’ sentiment.
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