Altcoins are experiencing an early crypto winter primarily due to a large number of token unlocks scheduled 2024. This trend is driven by early project investors seeking to quickly sell their and avoid holding unlocked altcoins on their balance sheets.
According to data from the Token Un platform, which 138 projects, it is expected that 120 projects will unlock tokens in 2024 The total market value of these assets is estimated to be $58 billion. This flood supply puts significant pressure on the altcoin market, forcing brokers to offer potential buyers discounts up to 40% on tokens from early investors.
The timing and scale of token unlocks have a significant impact on market dynamics. When many tokens are unlocked simultaneously, it can interest in purchasing and cause temporary drops in token prices. Investors may adjust their positions based on unlock schedule and expected impact on prices, leading to further price changes.
Some examples ofcoins that have experienced significant declines after unlocking include DYDX from the dYdX, which has dropped by 61% in the past three months. PYTH from Py Network and AVAX from Avalanche have also fallen by 55% and 66%,, over the same period.
The overall volatility in the altcoin market exacerbates these declines Among more than 90 major crypto assets by market capitalization, only 12 have positive returns since mid-March 2024. Approximately 80 projects demonstrate negative dynamics in this indicator, with the price of assets falling by more than half.
Analysts that over a hundred prominent altcoins fallen by over half since their peaks in early-to-mid-2024. This correction similar to previous market cycles seen in both201 and201.
Without an influx of funds or restoration of liquidity, further declines may occur.
While altcoins face this downturn, (BTC) and Ethereum (ETH) have relative resilience with only an11% drop for BTCand13% drop for ETHfrom their peaks this year.
Analyst had previously warned about potential declines due tounlockinga volumeoftokens.With nearly2 billion worthofunlockedtokensexpectedto enter themarketbefore July,a sell-off couldinlower cryptocurrency prices.Venture capitalfundsare alsoputtingsellingpressurealtcoinsto meetinvestor demandfor fundreturns.Additionally,growinginterestinartintelligenceiscontributingtothissituation.