Nearly $500 million worth of various tokens are set to be unlocked this week, potentially putting selling pressure on digital asset prices as investors, teams, and ecosystem advisors gain access to previously locked tokens.
According to TokenUnlocks data, significant unlocks include over $80 million in Worldcoin’s WLD, $51 million in Arbitrum’s ARB, and close to $40 million each of Eigenlayer’s EIGEN and Axie Infinity’s AXS.
Altcoins to Face Serious Selling Pressure
The supply of Worldcoin’s WLD will increase by 7% with the issue of 37 million tokens. Since July, these tokens, which were initially meant to be locked up for three years, have been subject to a five-year schedule. Investors, advisers, and team members will all receive the unlocked tokens.
Additionally, $51 million worth of tokens for Arbitrum’s ARB will be unlocked, increasing the amount of the well-liked Layer 2 network token that is in circulation. In the meantime, token unlocks for Eigenlayer’s EIGEN and Axie Infinity’s AXS will total about $40 million each.
One of the largest emissions by supply comes from Taiko, a Layer 2 network, which will unlock $18 million worth of tokens, representing 15% of its total supply. Solana’s SOL, valued at $80 million, will also continue to be unlocked in a linear plan, slowly releasing tokens into the market.
Market Reactions to Token Unlocks
Although unlocking tokens expands their total quantity, it does not ensure that they will all be sold right away. Traders may, however, engage in preemptive sell-offs in front of these unlock events if they anticipate that recipients may decide to sell their recently unlocked tokens, which would cause price declines. The Tie’s research indicates that the two weeks following a significant unlock event are usually when token prices drop the greatest.
If investors see the unlocks as indicators of the project’s progress or if the tokens are anticipated to be utilized for governance, staking, or other utilities rather than being sold on exchanges, market sentiment may stay favourable despite the possibility of price decreases. This might support prices and offset any possible selling pressure.
As $500 million in token unlocks loom, investors and traders will be closely watching for price movements, gauging whether this influx will negatively impact the market or be absorbed by positive sentiment around ongoing project developments.