‘Crypto Winter’ Arrives Early For The Altcoin Market As Venture Capital, Founder Selloffs Mount
25 Junho 2024 - 1:00AM
NEWSBTC
The altcoin market is experiencing an early “crypto winter” as
initial investors and founders of various projects sell off their
tokens. According to a recent Bloomberg report, this decline
can be attributed to a combination of factors, including the
unlocking of tokens held by venture capitalists (VCs) and founders,
as well as the selling pressure caused by the correlation between
altcoins and major network tokens. Altcoin Market Hit By Token
Unlock Wave As the crypto market recovered from the prolonged
decline of two years ago, many projects’ tokens have reached their
unlock dates this year. Per the report, venture capitalists and
founders who received these tokens in exchange for investments or
work contributions now have the opportunity to sell them. Out
of the 138 tokens tracked by researcher TokenUnlocks, 120 have
scheduled for this year, with a combined market value of
approximately $58 billion. This anticipated selling from
unlocking VCs has led to downside price reflexivity as non-VC
holders attempt to front-run the selling pressure, often resulting
in steep discounts to spot prices. Related Reading: Bitcoin Price
Crashes Below $61,000: The Main Reasons The price performance of
altcoins such as DYDX, Avalanche (AVAX), and Pyth (PYTH) has been
significantly impacted by token unlocks. DYDX’s token price has
more than cut in half since mid-March, while AVAX and PYTH have
also seen significant declines. These three tokens had unlocks
scheduled for May, adding to the selling pressure. Token
unlocks, which had previously helped drive 2023 prices, are now
receiving more attention from both VCs and public participants,
prioritizing short-term profits over long-term holdings for
altcoins with unlocks. Liquidity Crisis? Notably, since March
14, when Bitcoin (BTC) reached an all-time high of $73,700, only 12
out of the top 90 non-stablecoin assets tracked on centralized
exchanges (CEXs) have posted positive returns, while 81 have
recorded negative returns, according to the report. Bitcoin
has dropped around 12% since its peak, and most of the top 100
tokens have declined by more than 25%. The smaller altcoins,
including those correlated with major network tokens like Ethereum
(ETH) and Solana (SOL), tend to be sold off first when there is a
decline. The unlocking of tokens exacerbates this selling pressure,
further impacting the altcoin market. Related Reading: Toncoin On
Fire: Crypto Explodes To All-Time High – Can It Hit $10? According
to Bloomberg, the current market presents challenges for
infrastructure projects funded during the bear market phase.
While these projects launch their tokens, there is limited demand
from “regular buyers” at high prices. The altcoin market is
currently characterized by a lack of liquidity and a surplus of
tokens being unlocked, leading to downward pressure on prices.
Featured image from DALL-E, chart from TradingView.com
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