Token worth $650 million unlocked, altcoin rally cools down
Unlocking of Tokens worth $650 million tempers altcoin rally surgeAuthor: Krisztian Sandor, CoinDesk; Translation: Song Xue, LianGuai
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Cryptocurrencies DYDX, OP, and SUI have experienced significant declines prior to a large token unlock, underperforming the broader Coindesk market index.
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Unlocking increases the supply of digital assets and allows early investors to sell their tokens.
Several major alternative cryptocurrencies, including dYdX (DYDX), Optimism (OP), and Sui (SUI), all experienced a decline on Monday as a result of the overall poor performance in the cryptocurrency market, with a significant token unlock putting pressure on prices.
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According to data from Token.Unlocks and CryptoRank, the supply of altcoins is expected to increase by nearly $650 million this week.
The circulating supply of DYDX is set to increase with tokens worth approximately $480 million, nearly double the current market token quantity. OP, SUI, Axelar (AXL), Immutable X (IMX), 1inch (1INCH), and Hedera (HBAR) are also planning large-scale unlocks in the coming days.
A token unlock signifies an increase in asset supply, releasing tokens from their lock-up period, including the release of tokens to early investors. Earlier this year, crypto analytics firm The Tie found that large unlock events typically lead to price declines as supply growth surpasses investor demand for the asset.
According to CryptoRank data, Axelar (AXL) has declined by 10% in the past 24 hours as Monday marks the scheduled monthly token unlock, where tokens worth approximately $18 million (about 5% of its market cap) were added to its supply, including early investors.
Prior to the token issuance worth $480 million on December 1st, DYDX declined by 7% during the same period.
OP declined by nearly 6%, with tokens worth $40 million scheduled to unlock on November 30th.
SUI experienced an 8.8% sell-off on the same day as its supply is set to increase by $48 million this week.
On December 1st, 1INCH dropped by over 4%, with its supply expected to increase by nearly 10%, approximately $33 million. HBAR and IMX declined by 2%-3%, facing token unlocks of $11 million each this week.
Meanwhile, Bitcoin (BTC) declined by 0.7% during the same period, while the large market cryptocurrency index, CoinDesk Market Index (CMI), dropped by 1.5%.
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