A recent study of the top 300 cryptocurrencies by market capitalization found that more than 20% of these coins have a significant portion of tokens that have not yet been unlocked.
These findings are of great importance to investors and market analysts, given their potential impact on market prices and investor sentiment.
Most new cryptocurrency projects will have significant supply
Analysis using data from CoinGecko as of May 8, 2024 excludes stablecoins and wrapped assets. We focused on the ratio of market capitalization to fully diluted valuation (FDV).
“For the purposes of this study, low liquidity cryptocurrencies were defined as having a market cap to FDV ratio of 0 to 0.49, high liquidity cryptocurrencies were defined as having a ratio of 0.50 to 0.99, and only cryptocurrencies with a ratio of 1 are considered fully diluted. It has been considered. “CoinGecko explained.
What is noteworthy is that among these top 300 coins, 21.3% are cryptocurrencies with low liquidity. This suggests that a large supply is expected to enter the market. Among them, World Coin (WLD) had the lowest ratio at 0.02, followed by CHEEL at 0.06, Starknet (STRK) at 0.07, and SAGA at 0.09.
These cryptocurrencies, all launched in 2023 or 2024, represent new additions to the market.
Read more: Tokeneconomics Explained: The Economics of Cryptocurrency Tokens
This low float trend is mainly seen in cryptocurrencies introduced in the last four years. In fact, 54 of the 64 low-float large cryptocurrencies were launched during this period. This influx of new projects represents a dynamic expansion within the cryptocurrency space and signals potential market changes as these tokens become available.
In the near future, the market will see an immediate impact from the upcoming token unlocks.
For example, according to data from Token Unlocks, on May 12th Aptos will release 11.31 million APT tokens worth approximately $100 million, equivalent to 2.64% of the circulating supply. Additionally, on May 16, Arbitrum will unlock 92.65 million ARB tokens worth over $96 million, equivalent to 3.49% of the circulating supply.
These releases could put significant selling pressure on those tokens.
BeInCrpto also reported that approximately $3.58 billion worth of tokens will be unlocked in various projects this month. This significant volume highlights the scale at which these unlocks could impact the wider market and potentially increase volatility.
Read more: What is token economics? basic guide
Unlike newer cryptocurrencies, older cryptocurrencies typically have higher FDV ratios. Notable examples include Maker (MKR), Aave (AAVE), and Near Protocol (NEAR), with ratios of 0.95, 0.93, and 0.90, respectively. This means that most of the potential supply is already in circulation, a far cry from the fact that less than half of newly launched cryptocurrencies have achieved full dilution.
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