ID, CTSI, and YGG: Over $30 million worth of cliff token unlocks to watch next week

Source Fxstreet
  • Space ID, Cartesi, and Yield Guild Games have some of the most voluminous token unlocks scheduled for next week.
  • ID, CTSI, and YGG worth millions of dollars are set to flood markets in a cliff unlock.
  • Increased token supply could create massive sell pressure. 

The week starting April 21 does not have many significant unlocks lined up, with the only ones standing out being from three ecosystems. Investors should expect volatility around the calendar dates of the token unlocks and maintain cognizance that this event is often a bearish catalyst.

Also Read: What to expect from Bitcoin post halving, less than 70 blocks to go

Brace for these three token unlocks next week

Cryptocurrency token unlocks are typically considered bearish events for asset prices. Unlocked tokens enter circulation, increasing selling pressure on the asset across cryptocurrency exchange platforms.

First in line is the Space ID ecosystem, due to release 18.49 million ID tokens worth $14.16 million on Monday, April 22. Constituting 4.29% of the network’s circulating supply, the tokens will be allocated to the ecosystem fund, the foundation, community airdrop, and towards the network’s marketing endeavors.

The Cartesi network will follow, releasing 21.43 million CTSI tokens worth $4.36 million of Tuesday, April 23, issued to the team. The tokens will make up for 2.73% of the network’s circulating supply

Gaming ecosystem, Yield Guild Games, will be unleashing 16.69 million YGG tokens worth $14.01 million on April 27, making up for 5.33% of its circulating supply.

While token unlocks are generally considered bearish catalysts, those cryptocurrencies that unlock over 3% of their circulating supply are often the ones that suffer a correction in their price.

Reasons for token unlock events

Cryptocurrency projects have a defined roadmap from the time they launch. The ecosystem carefully plans how it will release specified proportions of its token supply into circulation on a batch-by-batch basis. The goal of such a structure is to promote the stability of the token while fostering long-term health.

Token allocation varies, depending on how they have been earmarked. The recipients determine whether selling pressure should be expected or not, depending on their assumed selling appetite.

Traders tend to keep an eye out for such events because of their nature to cause price volatility. Proactive traders know how to make a profit by trading around these events. The other lot is often rekt as part of exit liquidity.

Cryptocurrency metrics FAQs

The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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