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High inflation is detrimental to the value of goods or currency. Many countries have experienced this firsthand. When you print more money, either to fight economic problems or arbitrarily, you decrease its value. This means that the desired value is divided among the new supply. The same applies to altcoins.
Supply and Price in Altcoins
We mentioned earlier that 2022 will be an inflationary period for a significant portion of altcoins this year. If only 1 million out of 1 billion tokens are in circulation, it can help the respective cryptocurrency exceed $100. However, as the circulating supply eventually reaches 1 billion and if there is no surge in demand, this will be divided among the unit price of $100. DYDX serves as a good example in this regard. At the end of 2021, it had a circulating supply of 80 million after an airdrop, and its price approached $30. Now, the circulating supply is over 156 million and rapidly heading towards 1 billion.
Especially during bear markets, altcoins that continuously increase their circulating supply through token unlocks can experience massive losses. Another example of this is AXS Coin. Just 48 hours after unlocking 3.63 million tokens, the price of Axie Infinity (AXS) dropped by 8% to $6 today. Axie Infinity sales continue at full speed.
AXS Coin Analysis
On June 22, Axie Infinity increased its circulating supply by an additional 3.6 million tokens. This latest token unlock brought the total emissions over the past year to 31.6 million AXS. As expected, the inflationary pressure created by the newly minted tokens worth $20.6 million triggered a network-wide Axie Infinity sale. On June 22, the token unlock was allocated as stake rewards for holders who locked their tokens in smart contracts.
Just 48 hours after the token allocation was completed, on-chain data started to indicate sales alarms. As seen below, AXS Age Consumed has increased by 250% compared to the figures recorded before the token unlock event. Average Coin Age follows the orientation of long-term investors.
All these indicators suggest that if there are no surprises, the price may continue to decline. If we see closures below $5.18, the AXS Coin price could drop to $4.5.
