The November release of Aptos has stirred concerns among bearish traders, as the token appears to be facing difficulties in its price charts.
The imminent unlock event for Aptos has aroused the attention of bearish traders, as the token appears to be encountering challenges on its price charts. According to TokenUnlocks, a data source, the Layer-1 (L1) protocol is set to release 20 million Aptos ($APT) tokens in November.
This release marks the first unlock for Aptos’ team and investors and is currently valued at $103 million based on the token’s current market price. This constitutes more than 8.5% of Aptos’ total circulating supply, which stands at 235.02 million tokens.
Token unlocks involve the release of previously restricted or locked assets into the cryptocurrency market, potentially impacting market liquidity. The introduction of formerly locked tokens into the open market can increase the liquidity of the cryptocurrency in question, leading to higher trading volumes that may influence market dynamics and price volatility.
Cryptocurrency projects often implement token lockups to prevent early investors and project team members, who may hold significant amounts of tokens, from selling their holdings all at once. As previously mentioned, this can have implications for the cryptocurrency’s market value.
The research firm, The Tie, has put forward the idea that the APT token’s upcoming November unlock could inject a significant amount of liquidity into the market. In its weekly newsletter dated September 13th, it noted that the combined 20 million $APT tokens, equivalent to $106 million, set to be unlocked, represent 112% of the average daily trading volume over the past 30 days.
The Tie further explained, “These unlocks will occur on a monthly basis and will coincide with monthly staking reward releases (5.83 million APT, which is 32% of the daily average volume, is set to increase to 6.15 million APT in December). Additionally, since last year, 4.62 million APT tokens have been unlocked monthly for community and foundation purposes.”
In July, The Tie published research suggesting that significant cryptocurrency token unlocks tend to drive prices lower within two weeks. Their study, which analyzed over 350,000 unique unlock events involving more than 100 tokens, found that, on average, coin prices declined leading up to the unlock event. When the newly available liquidity represented more than 100% of the average daily trading volume, prices often rebounded temporarily, followed by a deeper fall within two weeks post-unlock.
The director of content at The Tie, Lawrence Lewitinn, speculated that the brief price rebound after the unlock might be due to traders feeling relieved that the market wasn’t immediately flooded with new tokens. However, within two weeks, token prices often dropped below their pre-unlock levels, indicating that holders may prefer to wait a few days before selling into the market.
Data from the derivatives market tied to $APT suggests that traders are becoming bearish on the cryptocurrency. Currently, open-interest-weighted funding rates are the most negative since February. A negative rate implies that traders with short positions are paying those with long positions to keep their bearish bets open.
On Wednesday, the number of active contracts representing the open interest for the token reached 5.33 million $APT, the highest since August 17th. However, the increase in open interest combined with negative funding rates indicates a bearish leaning in terms of leverage.
As of the time of writing, $APT has also seen a decline of nearly 7% in the last seven days, currently trading at $5.17.
This news is only analytical and informative and is not a recommendation for investment in any way.
