How Token Unlock Events Affect Altcoin Prices

Altcoins Alt Coins

Token unlocks in altcoins can cause big price changes, especially if demand doesn’t increase. Some big unlocks are expected soon, which might shake up the market.

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Token unlock events often cause altcoin prices to swing wildly and can impact their performance over time. If steps aren’t taken to boost demand for the newly available tokens, it can significantly harm their price. In the hours and days ahead, we’re expecting several important token unlocks, which could have a notable effect on the market.


Challenges of Returning to All-Time High (ATH) Levels for Altcoins

When most altcoins enter the market, they often have a limited circulating supply. Despite potential market value increases, many struggle to return to their all-time high (ATH) levels from their initial periods. Take DYDX, for instance, which debuted in 2021 with only 80 million circulating tokens and reached a formidable price of around $27. However, as the token supply rapidly expanded, the likelihood of sustaining double-digit prices significantly diminished.

XRP Coin serves as a prime example of this trend. Even if the market value of the altcoin were to return to its ATH days, the unit price would only reach a modest $1.3.

Impacts of Token Unlock Events on Cryptocurrency Prices

Token unlock events often have significant repercussions on cryptocurrency prices, particularly when large portions of the total token supply are released into the market. For example, at around 14:00 TSI, Aptos plans to release 7.32% of its total token supply, valued at approximately $224.82 million at current prices. This substantial increase in circulating supply could exert downward pressure on the token’s price unless offset by strong demand.

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Similarly, the SAND Token team is set to unlock 9.19% of its supply, worth over $96 million, on February 14th. If this release occurs without any unforeseen positive developments, it could lead to a notable price decrease. Another noteworthy event is the unlock of 2.6% of ApeCoin’s total supply, valued at $21.84 million, on February 16th.

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One of the largest unlocks in February will come from the AVAX team, with supply worth $363.5 million set to enter circulation on February 21st. Such events contribute to token inflation and may result in unfavorable outcomes for investors in the short term.

However, the impact of these unlocks can potentially be mitigated or even reversed by factors such as delays in the event, announcements of new projects, or strategic partnerships. These actions could counteract the downward pressure on prices and even drive prices in the opposite direction of initial expectations.


Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

 

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  • Asad

    Asad is a dynamic and talented cryptocurrency content author who brings a wealth of knowledge and enthusiasm to every article. With a deep understanding of blockchain technology and a passion for digital assets, Asad's writing is both informative and engaging.

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