Millions of tokens are expected to be unlocked by 2023, which could lead to a massive sell-off in the market.
Many crypto projects, including the Move-to-Earn Sweatcoin platform and Yuga Labs metaverse, will release additional tokens in 2023. With the crypto market already weakened by the collapse of giants Three Arrows Capital, Celsius, and FTX, the token release could exacerbate the crisis.
Crypto vesting, késako?
Crypto projects lock their initial tokens in special smart contracts called “vesting smart contracts”. When the contract expires, the tokens are released into the market. The vesting plan also assures investors of the commitment of the founders of the project.
While unlocking a token increases its market value, investors tend to liquidate their assets at the end of the vesting period. If the liquidation coincides with difficult macroeconomic conditions, token prices plunge into the red.
Historical market data shows that most cryptoassets lose value when released to the market. In this article, we take a look at three tokens whose vesting period ends in 2023.
Sweatcoin May Lose 30%
The first token that could crash in 2023 is Sweatcoin.
Launched in September 2022 on the NEAR blockchain, Sweatcoin is a crypto project that encourages its users to exercise by rewarding them with SWEAT tokens.
Sweatcoin smart contracts will release 326,223,776.52 SWEAT on January 13, 2023. Part of the tokens will be distributed via an airdrop, while the rest will go to the Sweatcoin treasury. An additional unlock of 227,105,696 SWEAT is scheduled for August 2023. According to CoinGecko, the tokens that will be unlocked represent approximately 2% of SWEAT’s daily trading volume.
Sweatcoin’s first airdrop, which distributed 2 billion tokens, increased the asset’s price to about $0.915 on September 15, 2022. A week later, the project released about 583 million SWEAT, causing the price of Sweatcoin to drop by 40%. The following two unlock (same amount as the first unlock) lowered the price by 20% and 30% respectively.
Therefore, the price of Sweatcoin is expected to drop by 30% to $0.01 after the planned release in January 2023.
BitDAO may fall below $0.25
The other crypto to watch is BIT. It is the governance of BitDAO, a decentralized Ethereum-based autonomous organization that supports DeFi projects with research and development, swaps and grants.
According to TokenUnlocks, BitDAO is expected to release around 188 million BIT ($53 million) on January 15, 2023, which is about ten times the token’s current trading volume.
BitDAO smart contracts unlocked 2 billion BIT tokens in July 2021, bringing the price of BIT to $1.72. On September 15, 267 million coins were released into the market, causing the price of BIT to drop by 11%. Due to the current bear market, the asset is now trading at around $0.28.
The next release, which is scheduled for January 15, 2023, is expected to drop the token’s price below $0.25.
ApeCoin is likely to go down if the bear market continues
Launched by Yuga Labs in March 2022, ApeCoin (APE) is the third token that could drop in 2023. As a reminder, Yuga Labs is the parent company of the famous NFT Bored Ape Yacht Club collection.
APE holders have governance rights within the ApeCoin DAO, which aims to develop Yuga Labs’ Web3 projects. A few months ago, Yuga Labs distributed 150,000,000 APEs to holders of NFT Bored Apes and Mutant Apes. The company also plans to release 7.3 million ($26 million) of APE tokens to its DAO coffers on January 17, 2023. Similarly, the project’s smart contracts will release approximately 33 million APE ($105 million) on 17 March 2023.
Shortly after launching in March 2022, ApeCoin went from $13 to $9.62. Then, its price peaked at $26.70 on April 29, 2022, before falling sharply to $5.63 on May 12, 2022. Its bearish trajectory, which continues to this day, reflects the steep decline in the speculative NFTs market like BAYC and metaverse.
If the market for non-fungible tokens continues to decline in 2023, the next breakout could have disastrous consequences for the APE crypto.
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