Winter Approaches Unveiling the Reason Behind Altcoin Market Declines Following Token Unlocks
The altcoin market is facing an early crypto winter due to the large token unlocks expected in 2024. According to Bloomberg, early project investors are seeking to sell their received tokens quickly to lock in short-term profits and avoid keeping unlocked altcoins on their balance sheets. The Token Unlocks platform, which tracks 138 projects, indicates that 120 are expected to unlock tokens in 2024, with an estimated total market value of $58 billion. This massive sale of assets is putting intense pressure on the altcoin market, with brokers often offering potential buyers tokens from early investors at a discount of up to 40%. The timing and scale of token unlocking can significantly impact market dynamics, with unlocking many tokens simultaneously reducing interest in purchasing and temporarily dropping token prices. Token unlocking events can cause market fluctuations as investors react to the new supply of tokens, resulting in price changes. Some tokens, such as DYDX, PYTH, and AVAX, have already collapsed after unlocking. While altcoins are falling, Bitcoin and Ethereum have shown relative resilience. The share of Bitcoin in the total capitalization of the entire crypto market is at 54.6%, indicating the market cycle and investor sentiment. Experts believe that traders need to monitor the ETH/BTC price ratio, which is the price of Ethereum in Bitcoin equivalent, to determine the conditions for starting the altcoin season.
