Altcoin Market Capitulates as Unlocked Tokens from VCs and Founders Flood the Market

The booming altcoin market, akin to a frigid winter in the crypto landscape, is bearing witness to an accelerating fire sale. Early bird investors and project

The altcoin market continues to observe a sell-off, with early investors and project founders quickly selling their tokens. This sell-off is largely attributed to the unlocking wave of tokens held by venture capitalists (VCs) and founders. According to recent analysis from Bloomberg, the sell-off can be attributed to several factors, including the unlocking of tokens held by venture capitalists and founders, and the persistent selling pressure fueled by the close correlation between altcoins and dominant network tokens. As the crypto market recovers from the steep downturn observed two years ago, several project tokens are meeting their unlocking deadlines this year. These tokens, typically received by VCs and founders in exchange for investments or labor contributions, are now becoming available for sale. Out of the 138 tokens being monitored by TokenUnlocks researchers, 120 are set to unlock this year. Together, these tokens have an approximate total market value of $58 billion**. This potential wave of selling from VCs has sparked a sequence of downside price reactions from non-VC holders. Faced with pressure to sell early, they often end up selling at a significant discount. The impact of token unlocks is evident in the price performance of DYDX, Avalanche (AVAX), and Pyth (PYTH). Since mid-March, the token price of DYDX has more than halved, while AVAX and PYTH have also recorded steep declines. Notably, all three **tokens** were set to unlock in May, which amplified the selling pressure. Earlier in the year, these token unlocks were hailed as a key driver for surging prices in **2023**. However, the focus shifted to VCs and public participants prioritizing short-term profits, leaving **altcoins** with unlocks later in the year unattended. From March **14**, when Bitcoin hit a high of **$73,700, only 12 of the top 90 non-stablecoin assets tracked on centralized exchanges yielded positive returns, while 81 recorded negative returns. Bitcoin has fallen about 12% from its peak, and most of the top 100 tokens have recorded a downturn of over 25%. In a downmarket, smaller altcoins, especially those closely correlated with major network tokens like Ethereum (ETH) and Solana (SOL), tend to feel the impact first. The selling pressure from token unlocks adds to this effect, sending shockwaves through the altcoin market. Bloomberg highlights the challenges faced by infrastructure projects that emerged during the bear market phase. As these projects release their tokens, there might be a lack of demand from retail buyers at higher price levels, considering the altcoin market is awash in tokens awaiting unlock. This dynamic contributes to a downward spiral, with prices being dragged down. Overall, the total crypto market capitalization has decreased and now stands at $2.19 trillion.

The above is the detailed content of Altcoin Market Capitulates as Unlocked Tokens from VCs and Founders Flood the Market. For more information, please follow other related articles on the PHP Chinese website!