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Altcoins Unlocking: Negative Impact On The Crypto Market Trends

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Analysts suggest that the ongoing bull run in cryptocurrencies is shorter than the previous one. Most of the popular and largest cryptocurrencies have been experiencing a downtrend since the beginning of this week.

There are certain reasons why analysts are expecting the ongoing bull run to end soon and a bearish trend in the future. This article will discuss some of the probable reasons for this and upcoming events in the industry.

The popular research platform in the industry, 10x Research, has shared about upcoming altcoin unlocking this year in its latest newsletter, published on Wednesday, May 8.

The report from 10x Research suggests lower market prices for altcoins in the near future, as it states, “A rapid succession of nearly $2 billion of token unlocks during the next ten weeks could lower the market for altcoins.”

List Of Altcoins To Be Unlocked This Quarter

CoinAmount to be unlocked (in million USD)
Aptos (APT)97
Starkware (STRK)79
Arbitrum (ARB)94
Immutable X (IMX)53
Avalanche (AVAX)330
Optimism (OP)64
Ethena (ENA)48
Altlayers (ALT)171

The report has listed this expected addition in circulation.

How Will It Impact Trends In The Market?

Increase In Supply

This increase in the circulation of coins can negatively impact the prices of the concerned coins. The expected fall in prices is based on the demand-supply mechanism of traditional economies. 

The supply and price share an inverse relationship. Stated differently, the demand and supply theory states that whenever the supply of any commodity or currency increases, the prices tend to decrease. This theory applies to cryptocurrencies as well. This application is also visible as the cryptocurrency with unlimited supply tends to trade at a lower price.

Increased Selling Pressure

Prices will decline in two ways before an increase in supply. They will also experience selling pressure as larger investors book their profits before the unlocking event to protect their investments from the upcoming expected price decline. This will further increase the supply in the market, leading to another decline in prices.

As the report stated, “Venture capital investors might be pressured to lock in recent gains, which could cap any upside performance of tokens with positive momentum, especially those where unlocks become available.”

A similar trend will be observed in Bitcoin, as more than $11 Billion worth of bitcoins will be distributed to creditors of crypto exchange Gemini’s Earn program and long-defectant crypto marketplace Mt. Gox, Velte Lunde, K33 Research Analyst, shared in a report on Tuesday.

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