Bloomberg Early Arrival of Crypto Winter Competition Leads to Selling Before VC Unlocking Resulting in Decline
Bloomberg pointed out that while “unlocking and selling” may be part of the intensified downturn, the prices of tokens such as DYDX and Avalanche (AVAX) have been halved, with PYTH falling by 70%. TokenUnlocks shows that all three tokens were unlocked in May, which indicates that unlocking and selling may be the main cause of the decline.
Competitive Coin “Winter” arrives early
Retail investors sell off before venture capital unlocks
Only 12 projects have risen since March
CoinMarketCap (CMC) data shows that since Bitcoin reached its peak in March, the market value of competitive coins, excluding Ethereum and stablecoins, has plummeted by 30%, and Bitcoin’s market share remains above 53%.
In addition, many projects’ tokens are undergoing “unlocking” this year. TokenUnlocks data shows that out of the 138 tokens it tracks, 120 will be unlocked this year, with a total market value of about 58 billion US dollars.
Market value trend of competitive coins
Edward Chin, co-founder of Parataxis Capital, said:
Given that these unlocking schedules are public and known, when “non-venture capital holders” try to sell before the venture capital unlocks, the price decline may intensify. You can also see these effects ferment downstream in the OTC market, as brokers are often required to offer locked tokens to early investors or employees at a discount of more than 60% off the spot price.
Bloomberg pointed out that while unlocking and selling may be a potential cause of the intensified downturn, according to CMC data, the prices of DYDX and Avalanche (AVAX) have been halved, with PYTH falling by 70%. TokenUnlocks shows that all three tokens were unlocked in May, which indicates that unlocking and selling may be the main cause of the decline.
Only 12 projects have risen since March
Tanawat Chiewhawan, CEO of TokenUnlocks, explained “unlocking and selling”:
Token unlocking actually drove prices up last year, but venture capital and retail investors have also started paying more attention to token unlocking and circulation data, leading market participants to focus more on short-term gains rather than holding unlocked tokens for long-term returns.
Bloomberg also quoted CCData data, mentioning that out of about 90 mainstream non-stablecoin assets tracked on CEX, only 12 projects have risen since Bitcoin hit an all-time high on March 14, while 81 have shown a decline. Among the top 100 market cap tokens, 61 have fallen by more than 25%, and 23 have fallen by more than 50%.
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