- Optimism, Yield Guild Games, and Singularity NET have cliff token unlocks scheduled this week, posing bearish clouds on prices.
- Large token unlocks typically free up liquidity, thereby increasing selling pressure on assets within two weeks of the unlock event.
- OP, YGG, and AGIX have noted similar token unlock events, with nearly complete recovery of asset prices post two weeks.
This week will see cryptocurrency token unlocks worth approximately $40 million unleashed to the market after their individual vesting periods. Out of these, almost $30 million will be from the Optimism (OP) network, while $2.56 million and $1.72 million will be from the Yield Guild Games (YGG) and SingularityNET (AGIX) networks respectively.
OP, YGG, AGIX prices brace for impact as millions of tokens set for unlocks
Optimism, Yield Guild Games, and SingularityNET ecosystems have massive token unlocks slated for later this week. Up to 12.42 million YGG tokens will be unlocked on September 27, a day before 9.68 million AGIX tokens are unleashed to the market. On September 30, 24.16 million OP tokens will flood the market. These constitute 6.7%, 0.8%, and 3.0% of their individual circulating supplies.
The events are expected to impact the tokens’ prices because their allocations are likely to inspire seller momentum as recipients look for a quick profit. For the Optimism network, the tokens will be split between core contributors and investors, while for the AGIX ecosystem, the tokens will go toward the AGIX/ADA liquidity.
Regarding the YGG project, tokens will be allocated to the community, investors, treasury, and founders. For the latter, while the treasury and founders may not be eager to sell, the community and investors are likely to pull the trigger as they look to escape being trapped in exit liquidity.
Potential impact on price
With token unlocks typically presenting as bearish catalysts, the events underline the anticipated slump in prices. For the Optimism token, previous cliff unlocks recorded an average of 15% in price shifts, with a run-up countered by a quick correction.
OP/USDT 1-day chart
On the Yield Guild Games camp, a similar outlook was presented, with YGG price losing all the ground covered ahead of the unlocks as the increased supply provoked massive exits with token holders looking to escape more losses.
YGG/USDT 1-day chart
As regards the SingularityNET price, AGIX suffered just as much, with an almost immediate fallout.
AGIX/USDT 1-day chart
Meanwhile, other networks also have unlock events slated for some time in the week, starting with Pendle, expected to give liquidity incentives in a few minutes from now, constituting up to 56,720 PENDLE tokens. On October 1, the 1Inch network also has an unlock event planned, that will see 15,000 1INCH tokens worth approximately $3,930. This will be a day after the Acala network unleashes 27.43 million ACA tokens worth around $1.35 million to the market.
Huge token unlocks this week
Data by The Tie, a crypto intelligence tracker, shows a steady and sustained increase in trading volumes around token unlocks dates, pointing to volatility. This leaves the onus on traders to exercise caution to avoid being caught on the wrong side of the wave.
Cryptocurrency metrics FAQs
What is circulating supply?
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
What is market capitalization?
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
What is trading volume?
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
What is funding rate?
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
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