Cryptocurrencies plunge: $2bn tokens and BTC from Mt. Gox cause FUD

WRITTEN BY Abel Stokes 95 views date-icon 2024-05-14 14:06:31

Cryptocurrency markets are under pressure amid the unlocking of $2 billion worth of altcoin tokens and $11 billion worth of bitcoin distributions.

Bitcoin was down 2.5% to $61,500 by late Wednesday, while solana and bitcoin cash lost more than 7% each.

While cryptocurrencies are still experiencing a correction, large waves of token unlocking expected over the next ten weeks could further slow the significant recovery.

As analyst firm 10x Research notes in a report published on Wednesday: "Abrupt token unlocks worth about $2 billion dollars in the next ten weeks could send the altcoin market tumbling."

Cryptocurrency token unlockings are often considered negative events because they increase supply and redistribute assets that were previously locked up to team members, organisations and early investors, including venture capital firms.

Over the next two months, various tokens totalling close to $2 billion will be put into circulation. This includes aptos (APT) at $97 million, starkware (STRK) at $79 million, arbitrum (ARB) at $94 million, Immutable X's (IMX) at $53 million, Avalanche's (AVAX) at $330 million, Optimism (OP) at $64 million, PRIME at $28 million, sui (SUI) at nearly $1 billion, ethena (ENA) at $48 million, Altlayer's (ALT) at $171 million and XAI tokens at $135 million.

It has also been noted that venture capitalists may begin to lock in profits, which could limit the rise in token prices, especially those for which unlocks become available. Altcoins aren't the only ones experiencing selling pressure.

K33 Research analyst Welte Lunde warns of the distribution of more than $11 billion in bitcoins (BTC) between lenders of cryptocurrency exchange Gemini's Earn programme and the long-defunct Mt. Gox platform.

Is it worth buying Aptos?

Lunde notes that a "wave of good old cryptocurrency FUD" is expected in the coming months, pointing to fears, uncertainty and doubt in the cryptocurrency community.

In light of the upcoming supply constraints, market watcher Arthur Chong, founder and chief investment officer of DeFiance Capital, suggests that the FTX payout could bring some relief. He believes about $14 billion to $16 billion could be paid to creditors, subject to bankruptcy court approval, and a significant portion of that amount could return to the cryptocurrency market.

"Expect at least $3-5 billion of cryptocurrency liquidity to be injected into the market," Chong added.

Overall, the cryptocurrency market is in a volatile state. Future dynamics will depend on various factors including regulatory news, technological innovations, changes in the global economy and investment strategies of major players.


Q: Why has the CoinDesk 20 Index dropped 3.4 % in the last 24 hours?
A: The index declined due to declines in major cryptocurrencies such as bitcoin and ether, as well as the participation of bitcoin cash and Solana.

Q: What are the main reasons for bitcoin's drop to $61,500 at the end of the day?
A: Bitcoin's fall can be caused by a variety of factors, including market decision-making, regulatory news or investment strategies of major players.

Q: What other cryptocurrencies showed declines amid this dynamic?
A: Bitcoin Cash (BCH) and Solana (SOL) were the worst performers in the index, losing more than 7% each.

Q: Do events in the cryptocurrency market in the U.S. affect global trends?
A: Yes, cryptocurrency market events in the US can have a significant impact on global trends given the leading role of the US in the cryptocurrency industry.

Q: What factors could affect the future dynamics of the cryptocurrency market?
A: The future dynamics of the cryptocurrency market could be influenced by a number of factors, including regulatory news, technological innovations, changes in the global economy and the investment strategies of major players.

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