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In a significant development for the cryptocurrency market, leading crypto projects are slated to release a total of $3.46 billion worth of tokens throughout October, with $735 million being unlocked in the first week alone. This wave of token releases is expected to have a profound impact on the market, offering both opportunities and challenges for investors and crypto enthusiasts.
These token releases are part of pre-scheduled unlock events, where projects make previously locked tokens available to the public. The scale of these releases is unprecedented, with some of the biggest names in the industry preparing to flood the market with liquidity. The first week of October will see the most notable unlocks, setting the stage for what could be a highly volatile period for crypto markets.
Data from the token analytics platform Token Unlocks revealed that the first week of October will end with more than $735 million worth of digital assets unlocked. According to the platform, this is only part of a much larger $3.46 billion in unlocked tokens expected throughout the month.
Per Token Unlocks. Cardano, ZetaChain, Immutable, Mode, DYDX, Neon, SUI, Athena, and Maverick Protocol, will unlock varying amounts. Ethena, a synthetic dollar project, will unlock 428 million tokens worth about $171 million, the largest for October. Others include ZetaChain unlocking $37 million worth of tokens, and Immutable’s $55 million. In addition, the Sui blockchain will unlock 64.19 million tokens (2.4% of circulating supply), worth about $120 million. These tokens will be released to the platform’s early investors, contributors, and other stakeholders.
Many unlock events involve tokens originally purchased and vested during the project’s presale phase. These projects may allow limited access to tokens shortly after the official launch, and gradually release the rest. Some exciting upcoming cryptocurrency presales for investors offer great potential, as early investors can receive an initial return, plus eventual benefits as the token’s value increases. This is particularly advantageous for projects with solid use cases and evident growth prospects.
Cliff and Linear Unlocks in October
The aforementioned releases are cliff unlocks, which are single releases of tokens after a specified period. Other platforms will engage in linear unlocks, which involve a periodic release of tokens executed according to a predetermined schedule.
In October, ten projects will launch linear unlocks. While Solana will unlock 524,000 tokens worth about $81 million, Bittensor will release 72,000 tokens, worth $41 million. Also, digital identity platform Worldcoin will unlock 37 million tokens worth $73 million. Other projects with scheduled releases include FIlecoin (FIL), NEAR, SEI, BEAM, Dogecoin (DOGE), and Avalanche (AVAX).
Historically, token unlocks have varying effects on the crypto market. Initially, there might be increased selling pressure as early investors and other stakeholders may sell their holdings for profits. This sudden injection of funds into the market may cause prices to fall. There could also be some market volatility caused by an actual and speculated price plunge, which may lead to a bearish sentiment notwithstanding the asset’s relative success over time.
Long-Term Effects of Token Unlocks
However, long-term effects may be more positive. For instance, the initial selling pressure usually stabilizes as the market absorbs a new tranche of tokens. Over time, the tokens are less concentrated among a small group of early investors and contributors, which leads to price stability. In addition, an increased number of tokens may lead to higher liquidity, which attracts more market participants since holders can quickly enter and exit positions.
Notably, these effects may vary by token. For instance, a large unlock from a network like Solana may impact the market more than small projects, but pump the asset regardless. Already, analysts predict that SOL will pump 5x by next year.
Token unlocks may also impact the general cryptocurrency market outside the asset’s ecosystem. Improved market conditions not only favor users across most tokens but also encourage new projects. For instance, a new meme coin called Moo Deng (MOODENG) recently hit a $300 million market cap not long after its official launch on the Solana blockchain. The upcoming Solana unlock may initially stifle some of MOODENG’s growth, potentially crashing its price and market cap. However, with time, the asset may be able to compete favorably with other large-cap options in the meme coin market.
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