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Finbold encountered three cryptocurrencies to avoid trading in the first week of May due to significant token unlocks.
Unlocking cryptocurrency assets often creates sell-off pressures that can drastically impact its price and investment results. Savvy traders and investors actively consider supply and demand dynamics to make profitable decisions and manage risks.
In particular, data from TokenUnlocksApp shows $417.68 million in potential sell-offs for the next seven days from April 27. The top 3 highest unlocks will happen from April 29 to May 3, releasing $271.26 million worth of tokens.
Avoid trading Memecoin (MEME)
First, Memecoin (MEME) stands out with a staggering $144.64 million worth of 5.318 billion MEME. The team will unlock these tokens on May 3, inflating the circulating supply by 32%, which may cause a crash.
From the total, 3.45 billion MEME will be released via airdrop for an imminent sell-off of $93.92 million. According to the CoinMarketCap index, this amount is over two times Memecoin’s 24-hour volume of $40 million.
dYdX Protocol (DYDX)
The decentralized exchange protocol DYDX is again featured among cryptocurrencies to avoid trading due to its unlocks. Finbold reported a similar warning for March 31 and, previously, for February 29, with 33.34 million tokens unlocked – worth $117.33 million and $130 million, respectively.
Now, the protocol will put the same amount of DYDX in circulation on May 1, currently worth $70.33 million. Evidencing the losses accrued from previous unlocks, worth nearly 50% less than from February’s unlock.
As for the distribution, early investors will receive most of the unlocks, worth $39.01 million by press time. The team will have $21.48 million worth of DYDX to sell in the following weeks, and a reserve for future employees will take the rest, worth $9.85 million.
Optimism (OP)
Finally, Optimism (OP) has the third-largest token unlock for the first week of May. Traders should also avoid trading OP in the following days despite a proportionally lower inflation than the previous two.
The layer-2 blockchain for the Ethereum (ETH) ecosystem will unlock 24.16 million OP, worth $56.29 million. On April 29, core contributors will receive 12.75 million tokens, while investors will receive 11.41 million tokens.
Increasing a token’s supply does not guarantee that its price will fall, as demand acts as a balancing force when there is any.
However, crypto traders will try to speculate on the economic effects these unlocks may have on price, which could bring increased volatility and worsen the potential risk-reward ratio. The market is uncertain and influenced by multiple factors, requiring proper risk management and learning when to avoid trading specific cryptocurrencies.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.