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Crypto Markets Under Pressure as $2B Worth of Altcoin Token Unlocks and $11B Bitcoin Distribution Loom

Crypto Markets Under Pressure as $2B Worth of Altcoin Token Unlocks and $11B Bitcoin Distribution Loom

Crypto Markets Under Pressure as $2B Worth of Altcoin Token Unlocks and $11B Bitcoin Distribution Loom

Bitcoin was lower by 2.5% to $61,500 late Wednesday, with solana and bitcoin cash each down more than 7%.

Bitcoin was lower by 2.5% to $61,500 late Wednesday, with solana and bitcoin cash each down more than 7%.

Bitcoin was lower by 2.5% to $61,500 late Wednesday, with solana and bitcoin cash each down more than 7%.

AccessTimeIconMay 8, 2024, 9:16 PM
Updated May 8, 2024, 9:19 PM
A wave of token unlocks and bitcoin distributions are pressuring crypto markets (Photoholgic/Unsplash)

Cryptocurrencies are still stuck in a corrective phase, but a wave of supply events worth billions of dollars could further delay any meaningful recovery.

"A rapid succession of nearly $2 billion of token unlocks during the next ten weeks could lower the market for altcoins," crypto analytics firm 10x Research noted in a Wednesday report.

Large token unlocks in crypto are usually bearish events, increasing supply by distributing assets that were previously locked up in vesting contracts to team members, organizations and early investors including venture capital firms.

Over the next two months, some $97 million of aptos (APT), $79 million of starkware (STRK), $94 million of arbitrum (ARB), $53 million of Immutable X's (IMX), $330 million of Avalanche's (AVAX), $64 million of optimism (OP), $28 million of PRIME, nearly $1 billion of sui (SUI), $48 million of ethena (ENA), $171 million of Altlayer's ALT and $135 million of XAI tokens will be added to circulation, according to data compiled in the report.

"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," the report said.

Not just altcoins facing selling pressure

Over $11 billion worth of bitcoin (BTC) will be distributed to creditors of crypto exchange Gemini's Earn program and long-defunct crypto marketplace Mt. Gox, K33 Research analyst Velte Lunde warned in a Tuesday report.

"The next months are rigged to see waves of good old crypto FUD," said Lunde, referencing the popular crypto acronym for fear, uncertainty and doubt.

Amid upcoming supply events, one market observer suggested that the FTX repayments might offer some relief.

Pending bankruptcy court approval, some $14-$16 billion of funds in U.S. dollars could be paid out to creditors, and a good chunk of that may flow back to the crypto market, said Arthur Cheong, founder and chief investment officer of DeFiance Capital.

"Expect at least $3-$5 billion of crypto-native liquidity to be injected back into the market," Cheong said in an X post Wednesday.

Ugly action in crypto on Wednesday

Late in the U.S day, the broad CoinDesk 20 Index was lower by 3.4% over the past 24 hours, with bitcoin down 2.5% to $61,500 and ether (ETH) lower by 3.6%. Bitcoin cash (BCH) and Solana (SOL) were the index's worst performers, each off by more than 7%.

Edited by Stephen Alpher.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.


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