According to DefiLlama, the cryptocurrency market will see more than $268 million worth of token unlocks this week. Moreover, the platform highlights that more than $1 billion worth of tokens will unlock over the next 30 days. The significant sum could bear bad news for the crypto market, and may trigger another crash if the supply can’t be absorbed. Let’s discuss in depth.
Will The Crypto Market Crash Due To Token Unlocks?
The recent crypto market crash may have been triggered by high token unlocks, amid other factors. A similar pattern could emerge from the upcoming token unlocks. Moreover, the over $1 billion worth of unlocks could lead to substantial concerns among market participants.
There are other factors that could also negatively impact the crypto market. Macroeconomic factors could present challenges to cryptocurrency assets. Slow economic growth could lead to investors pivoting their funds to safe havens like gold. Gold has hit yet another all-time high, signaling consistency inflows over the last week.
Also Read: Gold Price Breaks $3,800: Where Does It Go From Here?
However, there are some developments that could provide some cushioning to any potential market crash. The Federal Reserve is expected to roll out another round of interest rate cuts in October. A rate cut could lead to investors diverting their funds into risky assets, such as cryptocurrencies. This could lead to the token unlocks being absorbedby the market.
Additionally, October has historically been a bullish month for Bitcoin (BTC). If the cryptocurrency market follows the historical trend, we could see some protection from the large token unlock threat.
Moreover, the SEC is set to make key decisions regarding cryptocurrency-based ETFs over the next month. A positive development around ETF approvals could lead to increased interest among financial institutions. Institutional money could play a key role in keeping the market afloat.