Altcoin and Bitcoin Markets Brace for $13B Supply Shock

Key Takeaway

• Nearly $2B in altcoin tokens set to unlock and over $11B in Bitcoin distributions could pressure crypto markets, delaying recovery.
• Large unlocks across various cryptocurrencies may increase supply significantly, potentially capping gains for tokens with positive momentum.
• Pending FTX repayments could inject $3-$5 billion back into the market, offering some relief amidst widespread declines.

Supply Events Pressure Altcoins

The crypto market is currently navigating through a challenging phase, with a series of significant token unlocks poised to introduce nearly $2 billion worth of altcoins into circulation over the next ten weeks. According to a report by crypto analytics firm 10x Research, this influx of tokens, stemming from vesting contracts for team members, organizations, and early investors, is expected to exert downward pressure on altcoin markets. The report highlights upcoming unlocks for several major tokens, including $97 million of Aptos (APT), $79 million of Starkware (STRK), and nearly $1 billion of Sui (SUI), among others. This event could potentially dampen the market's recovery efforts by increasing supply and, consequently, affecting prices.

Bitcoin and Legal Payouts

In addition to the altcoin unlocks, the crypto market is bracing for over $11 billion worth of Bitcoin (BTC) to be distributed to creditors of the Gemini Earn program and the defunct Mt. Gox exchange. Analyst Velte Lunde from K33 Research has raised concerns that these payouts could weigh on Bitcoin prices by flooding the market with supply. Amidst these supply events, the market faces "waves of good old crypto FUD," as Lunde puts it, referring to the fear, uncertainty, and doubt that often accompany such significant market movements.

FTX Repayments and Market Impact

Despite the looming supply pressures, there's a glimmer of hope with the potential repayments from the FTX bankruptcy proceedings. Arthur Cheong, founder and chief investment officer of DeFiance Capital, anticipates that $14-$16 billion in U.S. dollars could be paid out to creditors, with $3-$5 billion of crypto-native liquidity possibly being reinjected into the market. This injection could offer some relief and support to the market, counterbalancing the bearish sentiment driven by the token unlocks and Bitcoin distributions.

Street Views

• 10x Research (Neutral on the altcoin market):

  "A rapid succession of nearly $2 billion of token unlocks during the next ten weeks could lower the market for altcoins."

• Velte Lunde, K33 Research (Bearish on Bitcoin):

  "Over $11 billion worth of bitcoin (BTC) will be distributed to creditors of crypto exchange Gemini's Earn program and long-defunct crypto marketplace Mt. Gox... The next months are rigged to see waves of good old crypto FUD."

• Arthur Cheong, DeFiance Capital (Bullish on the crypto market):

  "Expect at least $3-$5 billion of crypto-native liquidity to be injected back into the market."