Crypto Market at Risk Ahead of $297 Million Token Unlocks

The crypto market remained under pressure on Monday, a day after Bitcoin dropped below $95,000 and formed a death cross pattern for the first time this year. This weakness could continue as the market anticipates substantial token unlocks worth $297 million this week.

Major Token Unlocks Threaten Market Stability

The crypto market will likely remain under pressure as some notable cryptocurrencies unlock more tokens, increasing circulating supply.

Data from Tokenomics shows that all scheduled token unlocks this week total about $297 million.

LayerZero (ZRO), a major bridging token, will release 25.7 million ZRO worth around $37 million. The unlock represents 7.29% of supply. The ZRO price has already dropped 81% from its year-to-date high ahead of this supply increase.

Soon (SOON), up 130% in the past month, will unlock 15.2 million tokens valued above $25 million. The token has fallen 72% from this month’s high as traders price in dilution.

YZY, linked to Kanye West, will unlock 37 million tokens worth about $14.6 million.

ZKsync (ZK), Kaito (KAITO), and ApeCoin (APE) will also unlock millions of tokens. Many of these assets have already dropped over 50% this year.

Daily unlocks continue for tokens like Solana, Official Trump, Worldcoin, Dogecoin, Astar, and Avalanche. Pi Network will unlock 33.5 million tokens valued at $8.3 million.

Some networks are adopting buybacks and burns to offset inflation pressure.

Uniswap will burn 100 million UNI tokens from its treasury and maintain fee-driven burns on Unichain. OKX boosted OKB after committing to burn 60 million tokens. Chainlink has accumulated 803,388 LINK tokens worth over $11.4 million in its Strategic LINK Reserves.

Stablecoin Outflows Increase Market Risk

New capital is not flowing into crypto as fast as it is exiting.

Nansen data shows stablecoin balances on exchanges have fallen for weeks. About $85 billion remains on exchanges, down from a peak of $89 billion earlier this month. That is the lowest level since early October.

Stablecoin supply rising often contributes to price rallies because it signals new liquidity entering markets. Current flows suggest a more cautious environment.

Stablecoins Outflows in Exchanges are Rising

The crypto market risk is that new money is not entering the industry. The most effective way to verify this is to examine the volume of stablecoins entering and exiting exchanges.

Data compiled by Nansen shows that the amount of stablecoins in exchanges has been in a strong downward trend in the past few weeks.

There are now about $85 billion of stablecoins in exchanges, the lowest level since the first week of October this year. It has been in a downtrend after peaking at $89 billion this month.

Watching stablecoin inflows and outflows is an important aspect in fundamental analysis. In most cases, crypto prices jump when stablecoin supply is rising, as that means that more new money is entering the crypto market.

Other Risks Facing Crypto Tokens This Week

There are other risks facing the crypto market this week. One of the most notable developments is that futures open interest continued to fall, reaching a multi-month low of $139 billion. The open interest was hovering at over $250 billion a few months ago.

The other major risk is that the Bitcoin price has formed a death cross pattern, pointing to more downside in the coming days. A death cross pattern happens when the 50-day and 200-day Exponential Moving Averages (EMA) cross each other. A significant Bitcoin crash is likely to trigger further weakness in the cryptocurrency market.