Bloomberg: Early Arrival of Altcoin Winter Competition, Selling Before VC Unlocking Leads to Decline

Bloomberg points out that while "unlocking and selling" may be contributing to the downturn, tokens like DYDX and Avalanche AVAX have seen their prices halved, with PYTH dropping by as much as 70%. TokenUnlocks data shows that all three tokens unlocked in May, indicating that unlocking and selling may be the primary driver of the decline.

"Altcoin Winter" Arrives Early

CoinMarketCap (CMC) data shows that since Bitcoin reached its peak in March, the market value of altcoins, excluding Ethereum and stablecoins, has plummeted by 30%, while Bitcoin's market dominance remains above 53%.

Additionally, many projects are facing "unlocking" of a portion of their tokens this year. According to TokenUnlocks data, out of the 138 tokens they track, 120 of them are set to unlock this year, totaling a market value of around $580 billion.

Retail Investors Selling Ahead of Venture Capital Unlocking

Edward Chin, Co-Founder of Parataxis Capital, stated:

Given that these unlocking schedules are public and known, when non-venture capital holders try to sell before the venture capital unlocking, the downward pressure on prices may intensify. You can also see these effects ferment downstream in the OTC market, as brokers are often asked to provide locked tokens to early investors or employees at a significant discount, usually more than a 60% discount off spot prices.

Bloomberg pointed out that while unlocking sell-offs may be one potential cause for the downturn, DYDX, Avalanche AVAX prices have halved, PYTH has dropped by 70%, and TokenUnlocks shows that these three tokens all unlocked in May, indicating that unlocking sell-offs may be the main reason for the decline.

Only 12 Projects Have Risen Since March

Tanawat Chiewhawan, CEO of TokenUnlocks, explained the "unlocking sell-off" phenomenon:

Token unlocking actually drove prices up last year, but venture capitalists and retail investors have started paying more attention to token unlocks and circulating supply data, leading market participants to lean more towards short-term gains rather than holding unlocked tokens for long-term returns.

Finally, Bloomberg cited CCData, mentioning that out of about 90 mainstream assets excluding stablecoins tracked on CEX, since Bitcoin hit an all-time high on March 14, only 12 projects have risen, while 81 have fallen: among the top 100 market cap tokens, 61 have dropped by over 25%, and 23 have dropped by over 50%.