May 14, 2024
By Anjali Kochhar
Cryptocurrency markets faced significant pressure as concerns over upcoming token unlocks and Bitcoin distributions loomed large, contributing to a continued corrective phase.
Late Wednesday, Bitcoin experienced a 2.5% decline, settling at $61,500, while Solana and Bitcoin Cash each saw drops exceeding 7%.
According to a report by crypto analytics firm 10x Research, the expected release of over $2 billion in tokens over the next ten weeks threatens to further damper the altcoin market. These token unlocks often expand supply by releasing assets that were previously locked in vesting contracts to team members, organizations, and early investors, such as venture capital firms.
In the coming months, substantial amounts of various altcoins, such as aptos (APT), starkware (STRK), arbitrum (ARB), Immutable X’s (IMX), Avalanche’s (AVAX), optimism (OP), PRIME, sui (SUI), ethena (ENA), Altlayer’s ALT, and XAI tokens, are set to enter circulation, totalling nearly $2 billion.
The report highlights that venture capital investors may feel pressured to capitalise on recent gains, potentially capping any upward momentum for tokens with positive performance.
Additionally, concerns mount over the distribution of over $11 billion worth of Bitcoin to creditors of Gemini’s Earn program and the now-defunct Mt. Gox exchange. K33 Research analyst Velte Lunde warns of impending waves of fear, uncertainty, and doubt (FUD) in the market.
However, amidst these supply events, Arthur Cheong, founder and chief investment officer of DeFiance Capital, offers a glimmer of hope. Pending bankruptcy court approval, approximately $14-$16 billion in U.S. dollars could be distributed to creditors, potentially injecting $3-$5 billion of crypto-native liquidity back into the market.
Despite this optimistic outlook, crypto markets witnessed turbulent activity on Wednesday, with the CoinDesk 20 Index declining by 3.4% over 24 hours. Bitcoin and Ether (ETH) fell by 2.5% and 3.6%, respectively, while Bitcoin Cash (BCH) and Solana (SOL) emerged as the index’s worst performers, each experiencing drops exceeding 7%.
As the cryptocurrency market navigates these hurdles, investors remain cautious because to the uncertainty surrounding impending supply events and distribution issues.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
