According to market value, at least 20% of the top 300 cryptocurrencies are facing serious risks. Bitcoin remains at $61,000. Issues like token inflation are significantly impacting altcoin prices. Unlocking events in some altcoins lead to massive losses and create serious barriers such as not being able to see old ATH levels.
Altcoin Unlocking Events
An analysis of the top 300 cryptocurrencies revealed that a significant portion, around 20%, will still have serious token unlocks. Most of their supply has not yet entered circulation, which is alarming for those setting long-term strategies.
The analysis, using CoinGecko’s data as of May 8, 2024, excluded stablecoins and wrapped altcoins. It focused on the ratio of market value to fully diluted valuation (FDV).
“For the purpose of this study, low float cryptos were defined as having a market value / FDV ratio between 0 and 0.49, high float cryptos had ratios between 0.50 and 0.99, and only cryptos with a ratio of 1 were considered fully diluted.”
This means if the circulating supply ratio to the maximum supply is below 0.49, it indicates that the amount of asset to be unlocked is greater than what is currently in circulation.
The 20% Danger
Among the top 300 cryptocurrencies, 21.3% have a circulating supply to total supply ratio of 0.49 and below. Worldcoin (WLD) has the lowest ratio at 0.02, followed by Cheelee (CHEEL) at 0.06, Starknet (STRK) at 0.07, and Saga (SAGA) at 0.09. It’s not surprising since these altcoins were introduced into the market in 2023 and 2024.
Taking DYDX as an example, less than 10% of its supply was in circulation initially, and its price had reached the $30 mark. However, with the rapidly increasing circulating supply, it needs to reach a market value of $17 billion to see its old price again. This would only be possible by surpassing many giants like Cardano, Shiba, AVAX, TRX, DOT, LINK.
We frequently share updates on unlocking events and monitoring these schedules over the long term, setting targets relative to maximum supply is important. On May 16, Arbitrum will unlock $96 million worth of tokens, which constitutes 3.49% of its circulating supply. APT is unlocking $100 million worth today. In two weeks, AVAX has an unlocking event worth over $300 million. Just in May, there will be unlocking events worth $3.58 billion.
So, which assets have high FDV ratios? Older cryptos usually skip these processes. For instance, Maker (MKR), Aave (AAVE), and Near Protocol (NEAR) are among the top assets with ratios of 0.95, 0.93, and 0.90, respectively.
