Crypto projects big and small have nearly $1 billion worth of tokens scheduled to be unlocked in February as initial distribution periods expire, exposing fresh volatility risks. Avalanche, the batch’s layer-1 leader, has given its core team and investors permission to offload at least $344 million worth of securities onto exchanges next month.
The scheduled asset injection comes as cryptocurrencies wade through a painful bear market that saw most tokens lose over 80% of their value last year. With selling momentum already persistent, analysts worry huge batches of network insider selling could further depress prices struggling to stabilize since bottoming out in late 2022.
Avalanche Trails Uniswap Dump in Impact
Back in November, leading decentralized exchange Uniswap unlocked over $3 billion worth of its UNI governance token for founders and investors. The news preceded a further 25% price decline as new tokens flooded crypto markets, increasing the circulating supply by nearly two-thirds overnight.
While Avalanche likely avoids anything so severe given its smaller relative figures, many holders await February 22nd to cash profits or rebalance altcoin exposure risk after massive losses. The pressure falls predominantly on AVAX prices rather than fundamentals after impressive network growth.
Sandbox, Optimism, and Unlocking Hundreds of Millions
Behind Avalanche, additional layer-1 chains like Sandbox and Ethereum scaling network Optimism also schedule nine-figure token unlocks for existing stakeholders next month.
Estimates for February’s initial distribution terms, which primarily benefit teams and backers, approach $1 billion, in addition to smaller projects like Sui releasing tens of millions worth of assets.
The injections may pass with only minor impacts should cryptocurrencies keep recovering. But lingering macro uncertainty and the perpetual threat of contagion woes mean heavily diluted token supplies present yet another compounding variable to consider for crypto investors facing no shortage of volatility triggers.