- Ondo Finance’s token release exceeds 130% of its circulating supply, impacting market liquidity.
- AI agent tokens see up to 40% losses, questioning valuation sustainability amid volatility.
- Capital inflows drop 56.70%, limiting the market’s ability to absorb increased liquidity.
The altcoin market is seeing increased volatility as a substantial token unlock schedule will happen this week. With an estimated $3 billion worth of tokens set for release, the market is keen on the potential impact on altcoins. Ondo Finance will unlock a substantial portion of its tokens, adding to the already tense market.
Understanding Token Unlocks and Market Volatility
Token unlocks are pre scheduled releases of previously restricted digital assets, aimed at preventing large scale sell offs by early investors or team members. This week’s unlock schedule is one of the largest since November, with notable implications for several altcoins.
Research indicates that when unlock volumes surpass a token’s average daily trading volume by over 100%, the market often experiences increased volatility. This week’s unlock schedule, led by Ondo Finance’s release of 1.94 billion ONDO tokens, more than 130% of its circulating supply, is expected to impact market liquidity.
Ondo Finance and AI Agent Tokens in Focus
Ondo Finance’s token release on January 18 is a key event, with the unlock equating to over 130% of its circulating supply. Such a large influx could introduce substantial liquidity into the market, potentially influencing ONDO’s price and trading activity.
Meanwhile, AI agent tokens, including ai16z, have had notable corrections, with some losing up to 40% of their value. This downturn follows a period of rapid growth, raising questions about the sustainability of current valuations.
Investor Sentiment and Capital Inflows
Investor sentiment appears cautious as capital inflows into the crypto market have decreased by 56.70% over the past month, according to analyst Ali. Investment activity has dropped from $134 billion to $58 billion, indicating a significant reduction in market engagement.
This decline in capital inflows could increase the impact of the token unlocks, as the market’s capacity to absorb the additional liquidity might be limited. The response to these events could either stabilize the market reputation or result in heightened volatility and caution among investors.
