Will the upcoming token unlock worth over $280 million dent the altcoin market recovery?
- Over $280 million worth of tokens are set to be unlocked. Will ARB, APT, and OP’s prices fall further?
The crypto market, especially the altcoin sector, could face wild market volatility induced by token unlocks in July.
According to AMBCrypto’s look at Token Unlocks, over $280 million worth of cryptocurrencies would be unlocked in the next seven days, with Aribitrum [ARB] and Aptos [APT] controlling the largest chunk of the supply schedule.
Source: Token Unlocks
Aptos is set to unlock tokens worth over $70 million on the 12th of July. Additionally, ARB will unlock $66.6 million worth of tokens on the 15th of July, closely followed by Optimism [OP] at $54 million on the 30th of July.
In less than two weeks, Avalanche [AVAX] will join the supply schedule and unlock $245 million worth of its tokens.
Will the token unlocks dent the altcoin market?
AMBCrypto’s evaluation of June’s token unlocks indicated that there was varied token price performance before and after the unlock schedule.
ARB was amongst the worst performers after its mid-June unlock worth $105 million. X (formerly Twitter) user DeFi Scholar noted,
“Effect on the token [ARB]: Moved from 0.92 on the 16th to 0.77 (20% dip).”
The evaluation mentioned that overall market sentiment determined ARB’s performance during unlocks. However, Ethereum [ETH] L2s have faced massive value declines even during better market conditions.
In fact, a report from Deribit in early June linked the dismal performances of ETH L2s like ARB and Optimism to oversupply from unlocks.
For perspective, ARB has erased all its 2024 gains and has been below $1 since early June.
Source: ARB/USDT, TradingView
The upcoming $66 million worth of token supply would make it challenging for ARB to break the downtrend line and move above $0.76.
Source: ARB/USDT, TradingView
APT also recorded significant losses from recent drawdowns. However, it bounced firmly from $5 and could eye $7 or the previous range-low above $7.5. However, the unlock schedule could complicate matters.
Notably, APT fell 20% after unlocking over $100 million worth of tokens in June. This could repeat, especially if Bitcoin [BTC] does not extend its recovery and reclaims $60k.
However, if the negative market sentiment reverses and BTC turns bullish, the impact of the unlocks on altcoins could be minimized.
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