The Impact of Upcoming Token Unlocks on the Market

Next week, several significant token unlocks are expected, which could substantially affect the dynamics of the cryptocurrency market. Token unlocks, or "unlocking," refer to the process of releasing tokens that were previously frozen as part of investment rounds or other funding programs.

The Effect of Unlocks on the Market

Development teams typically plan tokenomics carefully to avoid significant selling pressure during various stages of unlocking, thereby preventing a drop in token price. However, certain factors, such as a lack of liquidity or the desire of early investors to secure profits immediately after unlocking, can negatively impact asset prices.

We've highlighted three key breakdowns worth tracking over the next week.

1. Immutable (IMX)

   • Unlock Date: August 9
   • Number of Unlocked Tokens: 32,470,000 IMX
   • Current Circulating Supply: 1,540,350,203 IMX

   Immutable X is a Layer 2 solution for scaling NFTs on the Ethereum blockchain. In September 2021, the project raised $12.5 million in an IMX token sale on CoinList in just one hour, later closing a $60 million investment round and securing an additional $200 million from ParaFi Capital, Declaration Partners, Tencent Holdings, and other companies in March 2022.

   On August 9, the circulating supply of IMX will increase by 32.47 million tokens. These tokens will be directed towards project development and its ecosystem. The crypto community is actively discussing the dynamics of IMX, linking it to frequent unlocks. One user on X remarked, “During the last bull market, $IMX had a higher price but a lower market cap. Now, the market cap is higher, but the price is significantly lower. This is due to the unlocking of supply.”

2. Xai (XAI)

   • Unlock Date: August 9
   • Number of Unlocked Tokens: 35,880,000 XAI
   • Current Circulating Supply: 519,821,836 XAI

   Xai is a first-of-its-kind third-layer gaming blockchain that utilizes Arbitrum technology. The project emphasizes simplicity and user-friendliness, removing the complexities of wallet management and making blockchain integration an unobtrusive part of the gaming ecosystem.

   On August 9, Xai will unlock over 35 million XAI tokens, which will be distributed among the team, investors, the project reserve, and the ecosystem fund.

3. Ethena (ENA)

   • Unlock Date: August 11
   • Number of Unlocked Tokens: 14,890,000 ENA
   • Current Circulating Supply: 1,806,250,000 ENA

   ENA is the native token of the DeFi protocol Ethena, which issues the synthetic dollar USDe. This asset is used for governance within the ecosystem and serves as a mechanism to incentivize participation and investment in the protocol.

   The debut of ENA was accompanied by an airdrop from Ethena Labs, distributing tokens worth $450 million to the community. On August 11, the project will unlock nearly 15 million ENA tokens for ecosystem development.

Other Upcoming Unlocks

Next week will also see token unlocks from projects such as dYdX (DYDX), Hashflow (HFT), and Moonbeam (GLMR). The total value of the released tokens will exceed $60 million. These events could significantly impact the market, so investors are advised to monitor the dynamics of these assets closely.

Conclusion

Selecting altcoins for investment in August 2024 requires careful analysis. Including tokens from projects like Immutable, Xai, Ethena, and others in an investment portfolio could be a justified step, taking into account the upcoming updates and events that may influence their value. Despite the current market instability, a prudent investment approach and an understanding of the key factors affecting altcoin prices can help reduce risks and enhance profit potential.