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20% of large-cap cryptocurrencies could impact the market
A recent study of the top 300 cryptocurrencies by market capitalization reveals that over 20% of these coins have a large portion of their tokens yet to be unlocked.
This finding is crucial for investors and market analysts, given the potential impact on market prices and investor sentiment.
Most new crypto projects will unlock significant supply
Using CoinGecko data as of May 8, 2024, the analyses excluding stablecoins and packaged assets. He focused on the ratio of market capitalization to fully diluted valuation (FDV).
“For the purposes of this study, low-float cryptocurrencies were defined as having a market capitalization to FDV ratio of between 0 and 0.49, high-float cryptocurrencies had ratios of between 0.50 and 0.99, and only cryptocurrencies with a ratio of 1 were considered fully diluted,” CoinGecko explained.
Significantly, low-float cryptocurrencies account for 21.3% of these top 300 coins. This suggests that an imminent large supply will enter the market. Between them, World Currency (WLD) has the lowest ratio at 0.02, followed by Cheelee (CHEEL) at 0.06, Starknet (STRK) at 0.07 e Saga (SAGA) to 0.09.
These cryptocurrencies, all launched in 2023 or 2024, represent the latest additions to the market.
To know more: Tokenomics Explained: The Economics of Cryptocurrency Tokens
This low-float trend can be seen especially in cryptocurrencies introduced in the last four years. In fact, 54 of the 64 low-float, large-cap cryptocurrencies were launched during this period. This influx of new projects indicates a dynamic expansion within the crypto space and signals potential changes in the market as these tokens become available.
Looking to the near future, the market will have to deal with the immediate impacts resulting from the scheduled unlocking of tokens.
For example, second data from Token Unlocks, Aptos will release 11.31 million on May 12th APT tokens, worth nearly $100 million, representing 2.64% of its circulating supply. Also, May 16th Referee will unlock 92.65 million ARB tokensworth over $96 million, 3.49% of its circulating supply.
These releases could create significant selling pressure on the respective tokens.
Also, BeInCrypto reports it around $3.58 billion worth of tokens will be unlocked this month through various projects. This substantial amount highlights the extent to which these breakouts could affect the broader market, potentially increasing volatility.
To know more: What is Tokenomics? A basic guide
Unlike newer cryptocurrencies, older ones generally have higher FDV ratios. Notable examples include Creator (MKR), Aave (AAVE), e Close to the protocol (NEAR), with ratios of 0.95, 0.93 and 0.90, respectively. This indicates that the majority of their potential supply is already in circulation, clearly differentiating itself from less than half of newly launched cryptocurrencies achieving full dilution.
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