Token Unlocks Pose Risks for Top Cryptocurrencies in 2024

At least 20% of top 300 cryptocurrencies face risks due to upcoming token unlocks in 2024, with 21.3% having a circulating supply to total supply ratio of 0.49 and below. Around $3.58 billion worth of tokens are scheduled to be unlocked across various projects throughout May 2024.

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Bijay Laxmi
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Token Unlocks Pose Risks for Top Cryptocurrencies in 2024

Token Unlocks Pose Risks for Top Cryptocurrencies in 2024

A recent analysis by CoinGecko reveals that at least 20% of the top 300 cryptocurrencies face serious risks due to upcoming token unlocks in 2024. The study, conducted as of May 8, 2024, found that 21.3% of these cryptocurrencies have a circulating supply to total supply ratio of 0.49 and below, indicating a significant portion of their total supply is set to enter the market in the near future.

Why this matters: This development has significant implications for the entire cryptocurrency market, as the influx of new tokens could lead to increased volatility and affect investor confidence. As the market continues to evolve, understanding the impact of token unlocks is crucial for investors and regulators to make informed decisions.

Among the cryptocurrencies with the lowest circulating supply ratios are Worldcoin (WLD) at 0.02, Cheelee (CHEEL) at 0.06, Starknet (STRK) at 0.07, and Saga (SAGA) at 0.09. These low-float cryptocurrencies, primarily launched in 2023 or 2024, represent the newer additions to the market. In fact, 54 out of the 64 large-cap cryptocurrencies with low float were launched within the last four years, highlighting the dynamic expansion of the crypto space.

The upcoming token unlocks are expected to introduce significant selling pressure and increased volatility in the market. On May 12, Aptos is set to release 11.31 million APT tokens, worth nearly $100 million and representing 2.64% of its circulating supply. Just a few days later, on May 16, Arbitrum will unlock 92.65 million ARB tokens, valued at over $96 million and accounting for 3.49% of its circulating supply.

These token unlocks are part of a broader trend, with around $3.58 billion worth of tokens scheduled to be unlocked across various projects throughout May 2024. The influx of such a substantial amount of tokens into the market has the potential to impact prices and increase volatility, particularly for altcoins.

In contrast to the newly launched cryptocurrencies, older established projects such as Maker (MKR), Aave (AAVE), and Near Protocol (NEAR) have much higher fully diluted value (FDV) ratios of 0.95, 0.93, and 0.90, respectively. These cryptocurrencies already have most of their potential supply in circulation, differentiating them from the newer low-float tokens.

As the cryptocurrency market continues to evolve and expand, the impact of token unlocks on prices and volatility remains a crucial factor for investors to consider. With a significant portion of the top cryptocurrencies facing risks associated with upcoming unlocks, market participants should closely monitor these events and adjust their strategies accordingly.

Key Takeaways

  • 20% of top 300 cryptocurrencies face risks due to upcoming token unlocks in 2024.
  • Token unlocks can lead to increased volatility and affect investor confidence.
  • $3.58 billion worth of tokens to be unlocked in May 2024, potentially impacting prices.
  • Newer cryptocurrencies with low float ratios are more vulnerable to token unlocks.
  • Investors should monitor token unlocks and adjust strategies to mitigate risks.