Token unlocks for cryptocurrencies like AVAX are not new, but that doesn’t change the fact that these unlocks can have an impact on the price. Depending on the size of the unlock, this could cause a market crash as millions of new coins enter circulation and are dumped at retail. This could certainly be the case for AVAX today, given the size of the upcoming unlock.
AVAX unlocks for $204 million
At AVAX’s latest unlock, a total of 9.5 million tokens are about to hit the open market. Now that the altcoin’s price is above $21, the total value of the unlock comes to approximately $204 million.
According to facts from the Token Unlocks website, this unlock adds another 2.68% of the total token supply to the circulating supply. This will bring the percentage of the total offering already unlocked from 55% to 57.68%. This cliff release will continue to increase AVAX supply, creating a potential roadblock to rallies as supply increases.
Source: Token Unlocks
The default allocation for this cliff unlock is spread across multiple spheres, with the majority going towards wagering rewards. Normally 50% of the total number of tokens unlocked goes towards this stake. Then the team share is 10%, while the foundation gets 9.3%.
Implications for the token price
Obviously supply inflation is not good for the token price and this will likely be reflected in the AVAX price shortly afterwards. However, if we look at the last unlock event with the same number of coins which took place on August 23, 2023, the chart shows only a small price drop, indicating that the unlock event was already priced in.
If this were to repeat, it is possible that AVAX price could maintain its momentum. But the difference between the current trend and that of August is that the price of the token has risen rapidly over the past day. This could lead to selling as investors look to take advantage of the price recovery and safeguard their profits.
If facts IntoTheBlock shows that the percentage of AVAX holders currently making a profit has hit a new 20-month high. A total of 4.02 million holders make a profit, which makes up 66% of the total holder base.
The last time holder profitability was this high was in April 2022, when the price was $94.93. What followed was aggressive profit taking, which would see the price drop by more than 70% within a few months. So a repeat of this could see the AVAX price return to $10.
Token price holds during last unlock | Source: AVAXUSDT on Tradingview.com
Featured image of Coin Culture, chart from Tradingview.com