Bloomberg Competition Coin Winter Strikes Early Preemptive Sale Before VC Unlocking Leads to Decline

Bloomberg pointed out that although “unlock selling” may be part of the downward trend, the prices of tokens such as DYDX and Avalanche (AVAX) have been cut in half, while PYTH has dropped by 70%. TokenUnlocks shows that these three tokens were unlocked in May, indicating that unlock selling may be the main cause of the decline.

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“The Winter of Competition Coins” comes early
Retail investors sell off before venture capital unlocks
Only 12 projects have seen an increase since March
CoinMarketCap (CMC) data shows that the market capitalization of competition coins, excluding Bitcoin, Ethereum, and stablecoins, has dropped by 30% since reaching its peak in March, while Bitcoin’s market dominance remains above 53%.

In addition, many projects this year are experiencing “unlocks” of their tokens. TokenUnlocks data shows that out of the 138 tokens it tracks, 120 will be unlocked this year, with a total market value of approximately $58 billion.

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Trends in the market capitalization of competition coins

Edward Chin, co-founder of Parataxis Capital, said:
Given that these unlock schedules are public and known, when “non-venture holders” try to sell off before the venture capital unlocks, the downward pressure on prices may intensify. You can also see these effects fermenting downstream in the OTC market, as brokers are often asked to provide locked tokens to early investors or employees at a discount of more than 60% off the spot price.

Bloomberg pointed out that although unlock selling may be one of the potential reasons for the intensified decline, according to CMC data, the prices of DYDX, Avalanche (AVAX), and PYTH have all been significantly cut. TokenUnlocks shows that these three tokens were unlocked in May, indicating that unlock selling may be the main cause of the decline.

Only 12 projects have seen an increase since March

Tanawat Chiewhawan, CEO of TokenUnlocks, explained the “unlock selling”:
Token unlocks actually drove prices up last year, but venture capital and retail investors have also started to pay more attention to token unlocks and circulating supply data, leading market participants to prefer short-term gains rather than holding unlock tokens for long-term returns.

Lastly, Bloomberg quoted CCData to mention that out of the approximately 90 mainstream assets on CEX being tracked, only 12 projects have seen an increase since Bitcoin hit its all-time high on March 14, while 81 have experienced a decline. Among the top 100 market cap tokens, 61 have declined by more than 25%, and 23 have declined by more than 50%.

AVAX
CMC
CoinMarketCap
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PYTH

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