Celestia (TIA) Token Unlock Today May Double Circulating Supply, Triggering Increased Volatility

Modular data availability blockchain project Celestia (TIA) is set to release 175.59 million previously restricted. This Celestia token unlock

Celestia (TIA) is preparing to release 175.59 million tokens that were previously restricted. This Celestia token unlock will take place today, October 30, and is the largest since the project’s launch in October 2023.

The event is likely to have a significant impact on TIA’s price, given the substantial increase in the available supply. With 175.59 million tokens set to be released, the total tokens in circulation will nearly double from the current 180 million.

As a point of reference, the last Celestia token unlock occurred on April 24 and consisted of 40 million tokens. Following the event, TIA’s price dropped by 16% over the next seven days.

However, it is important to note that several factors, including market conditions and the specific project dynamics, can influence an asset’s price movements.

To gain a deeper understanding of the potential impact on TIA’s price, BeInCrypto has analyzed the available data and consulted with industry experts.

Celestia OTC Sales May Reduce Selling Pressure

According to Tokenomist (formerly Token Unlocks), the Celestia token unlock is valued at $890 million at the current price. Upon release, the total tokens in circulation will be 80% of the total supply.

Typically, cryptocurrency projects lock a portion of their token supply and release it gradually to prevent early investors and insiders from selling large quantities immediately after receiving their allocations.

When the projects unlock these tokens, they become available for sale, making such events generally bearish. According to this thesis, TIA’s unlock today is likely to contribute to its 14% decline over the past seven days.

Amid this, on-chain data from Santiment shows that TIA’s volume has increased to $183.73 million. For context, a sharp increase in trading volume can validate the onset of a breakout or a breakdown.

Therefore, Celestia’s high trading volume suggests greater involvement from market participants. However, it also indicates rising selling pressure, which increases the likelihood of the downtrend continuing.

However, Taran Sabharwal, founder of an Over-The-Counter (OTC) trading platform, STIX, disclosed that some of these unlocked tokens have already been sold via OTC. This sell-off is likely to have contributed to Celestia’s price decline over the past week.

As a result, the selling pressure from this unlock could be less than 50% of the anticipated value.

“Heavy amounts of the first unlock were sold to OTC buyers, who hedged on perps, sending open interest ballistic over the last few months. We expect a lot of these shorts to continue winding down, partially negating the spot-selling pressure. This funding reset may be a bull signal for spot buyers.” Sabharwal posted on X.

The Chart Favors Bears at Time of Writing

At the time of writing, TIA’s price is $5.05 and is currently below the key Exponential Moving Averages (EMAs). As shown on the daily chart, the 20 EMA (blue) and 50 EMA (yellow) are around the same spot, suggesting that bears and bulls are struggling for dominance.

But since the altcoin’s value is below both indicators, bears have the upper hand. Should this remain the same, then TIA’s price could drop to $4.57 in the short term. However, if selling pressure intensifies, this drawdown could extend more than this, and the token could drop to $3.72.

On the other hand, if funding rates reset as Sabharwal envisages, this prediction might be invalidated. Instead, TIA might bounce and rally toward $6.16.