A substantial amount of cryptocurrency will be made available for several coins, including Ondo Finance's ONDO token, over the next week. This will likely lead to increased volatility in the market for alternative cryptocurrencies (altcoins).
According to Tokenomist, the total value of the weekly unlocks is $3 billion, making it the highest since November.
Ondo Finance's ONDO token, which is designed for decentralized tokenization, accounts for a large portion of the total.
On Jan. 18, the project will unlock 1.94 billion ONDO, valued at $2.23 billion, which is more than 130% of the token's circulating supply of around 1.4 billion. The upcoming ONDO unlock is also several times higher than its daily trading volume, which has recently ranged between $250 million to $300 million.
When a cryptocurrency is initially launched, a portion of the tokens are often frozen to prevent early investors and project team members from selling them all at once, which could lead to market instability. Instead, the tokens are gradually released over a period of time.
However, in some cases, such as with the ONDO unlock, the amount of tokens being unlocked is significantly higher than the token's circulating supply or average daily trading volume. This can increase the potential for volatility in the market.
According to research by The Tie, tokens that are unlocked in an amount equal to 100% of the average daily volume tend to experience increased volatility both leading up to and following the event.
At press time, ONDO was trading at $1.14, which is the lowest since Dec. 2 and marks a 5% loss for the day and nearly 15% month-to-ܞdate decline. TradingView data shows that the token's price has been falling steadily since hitting record highs above $2.10 on Dec. 16.
