The crypto market is witnessing a heavy dumping session with altcoins such as Avalanche (AVAX), DYDX, and PYTH recording high declines. Experts suggest that this trend is often referred to as an early “crypto winter.” It is driven by selling from initial investors and project founders.
Altcoin sees major resistance
Bitcoin (BTC) went on to hit its all time high (ATH) in March, since then altcoins market cap excluding Ether and stablecoins, has dropped by nearly 30%. Data shows that this decline reflects the broader impact of unlocked tokens flooding the market.
It is important to note that this year, many project tokens are becoming “unlocked.” This move allows venture capitalists and founders to sell the digital assets they received years ago for their investments or contributions.
Researcher TokenUnlocks reports that out of 138 tokens tracked, 120 are unlocking this year. It somehow represents a combined market value of about $58 billion.
Experts say that given these unlock days are publicly known, downside price reflexivity can be exacerbated as non-VC holders look to front-run anticipated selling from unlocking VCs. They also noted the impact on the over the counter (OTC) market, where brokers often offer locked tokens at steep discounts. Sometimes it exceeds 40% off spot prices.
Token unlocks set to hit the market
In 2023, token unlocks initially boosted prices. However, Tanawat Chiewhawan, CEO of TokenUnlocks, observed a shift: “Both VCs and public participants are becoming more aware of token unlocks and supply-side data. Most market participants now prefer short-term gains over long-term holds for altcoins with unlocks.”
Data from CCData reveals that out of approximately 90 top non-stablecoin assets tracked on centralized exchanges, only 12 posted positive returns since March 14, the day Bitcoin hit its all-time high. Meanwhile, 81 recorded negative returns. Bitcoin itself has dropped around 12% from its peak of nearly $74,000, with 61 of the top 100 tokens declining by more than 25%, and 23 digital assets plunging by over 50%.
The biggest digital asset, Bitcoin, is still dominating the market despite its 0.21% dominance drop over the last day. The cumulative crypto market cap dropped by 4.7% in the last 24 hours.
Bitcoin price took a hit of 5% over the last 24 hours. BTC is trading at an average price of $61,141, at the press time. Its 24 hour trading volume skyrocketed by 235% to stand at $26.6 billion.
