Crypto Market Anticipates $730M Impact From July Token Unlocks

  • July is shaping up to be a volatile month. 
  • Over $730 million worth of tokens will be injected into circulation. 
  • A major sell-off from investors is looming. 

July promises to be a pivotal month for the crypto industry, marked by major developments, including the likely approval of an Ethereum ETF, a possible altcoin season, and a looming sell-off from Mt. Gox users. Amidst these developments, the crypto market is also anticipating a wave of token unlocks from several crypto projects, fueling concerns of a looming sell-off. 

July Forecast: Token Unlocks Set to Flood Crypto Market

According to TokenUnlocks, many altcoins are set to unleash a wave of tokens into circulation in July. Leading the pack is Altlayer’s ALT, set to inject $127 million worth of tokens into the market.

Hot on its heels is XAI, which plans to unlock 72% of its circulating supply, valued at $94 million, by July 9 and potentially wreak havoc in its wake. 

Worldcoin’s WLD is also on the extensive list, with plans to start a large-scale linear unlocking on July 24. The OpenAI founder-owned project will release 6.62 million WLD tokens daily, valued at $18 million at press time, over 730 days. This massive unlock totals $13 billion, accounting for 54% of its market cap.

Other projects slated for token unlocks include DYDX, SUI, IO, XAI, IMX, APT, STRK, ARB, AXS, APE, and PIXEL. TokenUnlocks projects a $730 million impact from these token unlocks throughout July.

Crypto Market to Brace For Impact

Many modern crypto projects with a fixed token supply lock tokens to manage supply and express long-term commitment. 

While token unlocks foster investor trust amid team members’ fears of token dumps, they are also considered bearish events. This is because, historically, the surge in circulating supply often encourages investors to capitulate and lock in profits, resulting in panic among retail investors causing prices to underperform around unlock dates.

For instance, Arbitrum, expected to unlock $76 million worth of tokens in July, tanked 18% after unlocking 76% of its circulating supply in March. Similarly, Apecoin, slated for a token unlock in July, declined by 26% when it released 4.23% of its total supply into circulation in January. The BAYC utility token looks to unlock 2.48% in July.

Although it’s uncertain how the tokens scheduled for unlocks will react, July is poised for significant volatility.

On the Flipside

  • Mt. Gox’s rehabilitation trustee plans to reimburse assets totaling $9 billion on July 1, comprising 142,000 Bitcoin, 143,000 Bitcoin Cash, and fiat currency amounting to 69 billion Japanese yen.
  • Many crypto projects strategically release major positive news around token unlock dates to mitigate the impact of token unlocks on market sentiment.

Why This Matters

July is gearing up to be a rollercoaster month with several key developments on the horizon. The upcoming wave of token unlocks will introduce a lot of volatility into the market, prompting participants to brace themselves and adjust their strategies accordingly.

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Written by on 2024-06-30 22:50:38.

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