With investors typically shedding risky assets during prolonged bear markets, the release of millions of dollars worth of crypto tokens in 2023 could lead to a sharp sell-off in these assets.
The market is still grappling with the aftermath of the collapse of some major crypto companies such as Three Arrwos Capital, Celsius, and FTX. Still, some companies, including Metaverse-focused move-to-earning project Sweatcoin and Yuga Labs, are planning to launch new tokens.
Crypto Project Acquisition Schedules
So-called project acquisition smart contracts contain locked tokens and release them in a controlled manner on fixed dates. Such a calendar serves investors as assurance that the developers of a project are committed to pursuing their ultimate goal.
Although these releases increase the circulating supply of a token, investors often sell their newly received assets under difficult macroeconomic conditions. This, in turn, usually results in price crashes.
Data on the price of previous token releases can help provide insight into the impact of such events in the future. Below, we look at the potential consequences of the sell-offs of three cryptocurrencies increasing their circulating supply in 2023.
Sweatcoin could drop 30%
In 2023, Sweatcoin could become the first token to experience a stock market crash.
The project launched on the NEAR blockchain in September 2022 and rewards users of its app with the SWEAT utility token for physical activity.
On January 13, 2023, 326,223,776.52 SWEATSHIRT (about $3,500) would be for an airdrop as well as cash contributions. Another version of 227,105,696 SWEAT (about $2,430) is scheduled for August 2023. According to Coingecko, these unlocked tokens represent approximately 2% of SWEAT’s daily trading volume.
After that first airdrop of 2 billion utility tokens on September 15, 2022 The SWEAT price has risen to around $0.915. As the Coingecko data also show, the release of 583 million SWEAT the following week caused the price to drop by as much as 40%. Two other token rejections of a similar magnitude caused a another 20% or 30% price drop.
These figures suggest that Sweatcoin could fall up to 30% below $0.01 after the expected release in 2023.
BitDAO (BIT) Could Fall Below $0.25
Another crypto on the brink is BitDAO’s tradable governance token, BIT. The decentralized and autonomous organization of the Ethereum blockchain supports DeFi projects through research, development, token exchanges and grants.
According to TokenUnlocks, BitDAO 188 million BIT as of January 15, 2023 (about $53 million), which is about 10 times the trading volume of this token.
In July 2021, BitDAO released 2 billion tokens, driving the price of BIT to $1.72, before dropping around 22% on September 8, 2022. After posting an additional 267 million BIT on On September 15, 2022, the price fell another 11%. The token is currently trading around $0.28.
The release of 188 million BIT scheduled for January 15, 2023 could eventually push the price down below $0.25.
APE could also see a further price drop
ApeCoin (APE) was launched in March 2022 by Yuga Labs, the developers of the top notch Bored Ape Yacht Club NFT collection. This token is also likely to see a drop in price over the coming year.
APE holders have governance rights in the ApeCoin DAO to have a say in the development of Yuga Labs Web 3 and Metaverse. Initially, the project paid 150,000,000 APE via airdrop Bored and Mutant Ape Yacht Club NFT holders. Now, Yuga Labs plans to release about 7.3 million (about $26 million) APE for ApeCoin DAO cash on January 17, 2023. Moreover, should on March 17, 2023, approximately 33 million additional APE worth US$105 million to unlock.
After the token launched in March, the price briefly rose to $13.00 before dropping to $9.62. On April 29, 2022, the token peaked at $26.70, but dropped to $5.63 on May 12. The continued downward trend to date reflects diminishing interest in high-risk NFTs, such as BAYC, and metaverse-related initiatives amid an ongoing crypto winter..
Barring a noticeable resurgence of interest in the NFT market and the Metaverse in 2023, the next token releases worth $100 million could have disastrous consequences for APE holders.
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