Altcoins
Altcoins hit a wall amid wave of new tokens
5:00 p.m. ▪ 3 min read ▪ by Fenelon L.
The cryptocurrency market is preparing for another wave of turbulence. Several major token issuances are scheduled in the coming days, raising concerns among investors about their potential impact on prices. This comes as the market as a whole struggles to find a stable equilibrium.
Planned inflation a source of concern
Managing the circulating supply is a major challenge for most altcoinsWhile the issuance of new tokens is intended to support the development and adoption of the projects concerned, it raises concerns about their impact on valuations.
This problem is particularly visible in the case of XRP: although its overall valuation has reached record highs in 2021, the excess supply of tokens in circulation has kept its individual price below $1.35.
This phenomenon is not isolated. Promising crypto projects like Avalanche (AVAX) have to deal with annual supply growth of over 10%, which inevitably slows down their progress on the market.
The calendar for the coming weeks includes several significant injections of new tokens. For example, the Optimism (OP) platform is expected to introduce an additional 10 million tokens in mid-July, increasing its supply by approximately 1%. Meanwhile, Starknet (STRK) is eyeing a more substantial expansion with an additional 64 million tokens, representing a 5% increase in its circulating supply.
Different strategies in response to the influx of new tokens
Projects are taking different approaches to handling these issuances. Arbitrum (ARB), one of Ethereum’s leading scaling solutions, is set to distribute 92.6 million tokens to its team and investors. The move comes as ARB’s price is trading near all-time lows, raising questions about the timing.
Others are banking on these offerings to revive interest in their ecosystem. Axie Infinity (AXS), which has been struggling since the GameFi sector downturn, will distribute 2.45 million tokens as staking rewards. ApeCoin (APE) will follow a similar strategy with the issuance of 15.6 million tokens, hoping to revive enthusiasm for the project.
In a bull marketThese emissions could have boosted prices in the medium term. However, the current situation reverses this dynamic. Teams and investors are looking to maximize their sales, putting additional pressure on already fragile prices.
The influx of new tokens In a bearish crypto market, this presents a major challenge for these altcoins. Their ability to absorb this additional supply without a price collapse will be a crucial test of their resilience and attractiveness to investors.
Optimize your Cointribune experience with our “Read to Earn” program! Earn points for each article read and access exclusive rewards. Sign up now and start earning benefits.
Click here to join “Read to Earn” and turn your passion for crypto into rewards!
Fenelon L.
Passionate about Bitcoin, I love exploring the intricacies of blockchain and cryptos and sharing my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I strongly believe that Bitcoin is the tool that can make this possible.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be considered investment advice. Do your own research before making any investment decision.