The crypto market, particularly the altcoin sector, is bracing for potential turbulence as over $280 million worth of tokens are scheduled to be unlocked in July. This upcoming supply surge could dampen the recent recovery momentum in the altcoin space.
A report by AMBCrypto identified Aptos (APT) and Arbitrum (ARB) as holding the lion’s share of these unlocks. APT faces a $70 million unlock on July 12th, followed closely by ARB’s $66.6 million unlock on July 15th. Optimism (OP) is slated for a $54 million unlock later in the month on July 30th. Avalanche (AVAX) will add to the selling pressure in early August with a $245 million token unlock.
The impact of these unlocks remains uncertain. While June’s token unlocks resulted in mixed performances, some altcoins were hit hard. ARB, for example, suffered a 20% price drop following a $105 million unlock in mid-June. Analyst DeFi Scholar observed the token’s decline from $0.92 to $0.77 after the event.
The prevailing market sentiment appears to be a crucial factor. AMBCrypto’s analysis suggests that overall market conditions significantly influence how token unlocks affect prices. Ethereum Layer 2 scaling solutions like ARB and Optimism have witnessed substantial value erosion even during periods of positive market sentiment.
A report by Deribit in June linked the struggles of ETH Layer 2 tokens to the pressure from token unlocks. In ARB’s case, the existing downtrend and its inability to breach the $0.76 resistance level suggest the upcoming $66 million unlock could further hinder its recovery.
APT, while recovering from recent lows, faces a similar challenge. Despite a rebound from $5, the upcoming unlock throws a wrench into its potential climb toward $7 or higher. A 20% price drop followed APT’s $100 million unlock in June, and a similar scenario could unfold if Bitcoin (BTC) fails to sustain its current recovery and reclaim the $60,000 mark.
However, a potential reversal in negative market sentiment and a bullish surge in Bitcoin could mitigate the impact of these unlocks on altcoin prices. Investors are closely watching these developments as July unfolds, with cautious optimism tempered by the looming threat of token supply increases.
