Hey guys! August is a big month for us in crypto because lots of projects are releasing a ton of previously locked tokens – about $1 billion worth! We’re talking about big names like Ripple, Avalanche, Wormhole, ImmutableX, Aptos, The Sandbox, Arbitrum, and Starknet.
Token unlocks can shake up prices, so read this article to see what might happen and if you should be cautious about these projects. Are we having an altcoin crash soon?
Why Token Unlocks Matter
Before telling you about this month’s unlock, I want to explain why talking about token unlock matters. There’s a longtime trend of projects launching tokens with low float and high FDV ( fully diluted value). But now, people are starting to take notice of it. And that’s good because these projects carry more risk than others do.
Source: X
Low Float refers to the number of tokens currently available for trading. When there are only a few tokens available (low float), their price can be more volatile. You can find this for any token by looking for the circulating supply. Then look at it as a % of the total supply. More is better. A big token unlock increases the number of tokens available, which can lead to price drops because more people might start selling.
High FDV talks about the total value of all tokens if all were in circulation. It stands for Fully Diluted Value. When a project has a high FDV, it means its total value is high even if not all tokens are available yet. If a large number of these tokens suddenly become unlocked, it can change how investors see the project’s value, often leading to price changes.
Source: X
Wormhole and Worldcoin are two projects that show the danger of low float high FDV:
- Wormhole currently has 1.8 billion tokens available out of a total supply of 10 billion $W tokens. This means only 18% of its tokens are up for trading. Token unlocks can disrupt Wormhole’s price if the market struggles with the extra supply.
- Worldcoin has only 311 million $WLD tokens available out of 10 billion. So, only 3.11% are currently out for trading. Future token unlocks can spark selling pressure or cause the $WLD to dip.
So, token unlocks can flood the market with more tokens, changing supply and demand, and affecting prices. For many insiders and whales whose tokens have been locked up, it’s the first chance they have to sell. And some of them will. This is why it’s important to pay attention to them.
1) ImmutableX
First up is ImmutableX. The Web3 gaming project plans to unlock 32.5 million tokens valued at $49 million on August 9. These tokens make up 2.11% of its circulating supply. They are allocating this month’s unlock to:
- Ecosystem development: will receive 15.91 million tokens valued at $22.28 million
- Project development: will receive 16.56 million IMX tokens valued at $23.18 million.
Their last unlock was on July 12. $IMX has lost about 17% of its value in the past 30 days. So, we can expect a further dip in price. Or at least more selling pressure.
Source: X
Regardless of the current price drop, ImmutableX remains one of the top Web3 gaming projects. But you should keep an eye on their price movement after the unlock as that could be a good entry point for some
2) Avalanche
Our next major unlock takes us to Avalanche, a layer 1 blockchain. Avalanche plans to unlock 9.54 million AVAX tokens valued at $251 million on August 20. This unlock represents 2.42% of its circulating supply. Here’s how they plan to allocate this unlock:
- The Avalanche team will receive 4.5 million AVAX worth $118.53 million
- Strategic partners will receive 2.25 million AVAX worth $59.27 million
- The rest goes to the Foundation and as airdrops.
Source: X
The massive token unlock comes at a bad time for the AVAX token which has been down 11% in the last 30 days. Avalanche isn’t the only project with a big token unlock in August. Here are some others:
- Arbitrum: On August 16, Arbitrum will unlock 2.8% of its circulating supply, which is 92.6 million tokens worth about $67 million. Arbitrum recently became the first Layer 2 network to hit a $150 billion total volume on Uniswap.
- Starknet: On August 15, Starknet will unlock 64 million tokens, making up 4.4% of its circulating supply, worth about $35 million.
- The Sandbox: On August 14, The Sandbox will unlock 9% of its circulating supply, which is 205 million tokens worth about $69 million. The platform raised $20 million in June to reach a $1 billion valuation.
- Aptos: On August 12, Aptos will unlock 2.41% of its circulating supply, which is 11.31 million tokens worth around $80 million.
What Can We Expect From These Unlocks?
Usually, large token unlocks lead to more selling pressure, which can cause prices to drop. For example, Aptos unlocked $69.44 million worth of APT tokens on July 12. This led to a price decline due to selling pressure.
The huge unlock dropped the price of $APT from $6.31 on July 11 to $5.95 after the unlock. So we can expect a similar pattern for most of these projects. For others, these possible dips could mean a good entry time. So, keep an eye on these dates.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
