3 Cryptocurrencies to Avoid Next Week Due to Token Unlocks
Introduction: October Crypto Market Outlook
While October has seen positive momentum for major cryptocurrencies like Bitcoin, not all tokens are likely to perform well. Certain cryptocurrencies face significant risks due to upcoming token unlock events. These unlocks can increase the token supply, which can result in a drop in prices, especially for smaller projects.
This article highlights three cryptocurrencies—Metars Genesis (MRS), ApeX (APEX), and Solidus Ai Tech (AITECH)—that traders should be wary of in the upcoming week due to their token unlock schedules.
What Are Token Unlocks and Why Do They Matter?
Token unlocks are planned events where previously locked tokens are released into the circulating supply. While this is often an essential part of project roadmaps, it can also cause sharp price drops. More tokens on the market dilute the value of existing tokens, especially when many token holders sell off their unlocked assets at once.
For small cryptocurrencies, this additional supply creates high volatility. If demand for the token doesn’t increase to match the new supply, prices are likely to fall. That’s why traders need to be cautious, especially when the unlocked tokens represent a significant portion of the token’s total supply.
Metars Genesis (MRS): Price Decline Anticipated
The first cryptocurrency to approach with caution is Metars Genesis (MRS), which will unlock 10 million tokens, worth around $15.6 million, starting today. This release accounts for 12% of the token’s total supply. With such a large proportion of tokens flooding the market, there is a high risk of a price decline, especially if early investors or project insiders decide to cash out.
Metars Genesis has been performing well in the AI space, but traders should hold off from buying until the market adjusts to this new supply.
Key Risks:
- Unlocking 12% of the total supply
- Potential sell-off by early investors or insiders
ApeX (APEX): A 20% Supply Increase
Apex (APEX) is set to unlock 9.62 million tokens valued at $14.34 million. This event will increase its circulating supply by 20%, which is a significant dilution for current holders. Many of these tokens are going to early investors and the project development team, who are likely to sell a portion of their holdings. This surge in supply can put substantial downward pressure on the token’s price.
Given the size of the unlock relative to its total supply, Apex is a risky asset for trading next week.
Key Risks:
- 20% increase in circulating supply
- Likely sell-off by early investors and team members
Solidus Ai Tech (AITECH): AI Potential but Market Risks
The third cryptocurrency to avoid next week is Solidus Ai Tech (AITECH). It will unlock 80.18 million tokens worth $8.08 million, adding 7.6% to its circulating supply. Despite the growing interest in AI-related cryptocurrencies, this token unlock could trigger selling pressure if early investors decide to cash out.
Although Solidus Ai Tech has a promising future in the AI market, the upcoming token unlock presents a short-term risk that could lead to a price drop.
Key Risks:
- 7.6% supply increase
- Potential for early investors to sell, causing a dip in price
Why Liquidity Matters During Token Unlocks
Liquidity plays a crucial role in determining how token unlocks impact a cryptocurrency’s price. High liquidity allows an asset to be bought or sold with minimal impact on its price. Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) have high liquidity and can absorb large sell-offs without significant price changes. On the other hand, smaller tokens like Metars Genesis, ApeX, and Solidus Ai Tech have much lower liquidity, making them more prone to sharp price swings during unlock events.
When a large number of tokens are unlocked and sold in a short period, it can overwhelm the available demand. This is particularly problematic for low-liquidity tokens, where even a modest sell-off can lead to a steep price drop. For example, if many early investors sell their unlocked Metars Genesis tokens at once, the market could be flooded, driving down prices rapidly.
Low liquidity can also make it harder for traders to exit positions during a token unlock event. Those looking to sell may find fewer buyers, forcing them to accept lower prices. This can further exacerbate the price decline.
Tokenomics and Its Role in Token Unlocks
Understanding a cryptocurrency’s tokenomics—how its tokens are allocated and distributed—is key to predicting how a token unlock will affect its price. Tokenomics includes factors like the total supply, distribution to various stakeholders, and release schedules. Projects that allocate a large percentage of their supply to early investors or development teams are more likely to experience sell pressure during token unlocks.
For instance, a significant portion of the ApeX token unlock is set to be distributed to early investors and team members. These groups are often inclined to sell, especially if the token’s value has appreciated since their initial investment. This could lead to a price decline, as demand may not be able to absorb the increased supply.
The timing of token releases is also an important aspect of tokenomics. Projects that release tokens gradually over time tend to see less price volatility than those that release large amounts at once. In the case of Metars Genesis, the release of 12% of its total supply in a single event could lead to considerable price instability.
Strategies for Managing Risk During Token Unlock Events
While token unlocks can create risks, traders can employ various strategies to mitigate potential losses:
- Sell Before the Unlock: One of the simplest strategies is to sell your tokens before the unlock event. This allows you to avoid the price drop that often follows large token unlocks, especially for low-liquidity cryptocurrencies like Metars Genesis and ApeX.
- Short-Term Trading: For experienced traders, shorting the token before or during the unlock event can be a profitable strategy. However, this approach carries a high risk and requires precise timing and market analysis to be effective.
- Post-Unlock Dollar-Cost Averaging (DCA): Once the unlock event is over and prices stabilize, traders may consider dollar-cost averaging. This involves buying the token in small amounts over time to reduce the risk of buying at a volatile price point. DCA is especially effective for long-term investors who believe in the project’s fundamentals but want to avoid short-term price fluctuations.
- Monitor Market Sentiment: Token unlocks are often accompanied by important project updates, such as new partnerships or product releases. Positive news can offset the negative effects of a token unlock, while bad news can amplify selling pressure. Staying informed can help traders adjust their strategies accordingly.
- Stay Flexible: Every token unlock event is unique, and market conditions can vary. Traders should remain flexible and be prepared to adjust their strategies based on how the market reacts to the unlock event.
Conclusion: Avoid Metars Genesis, ApeX, and Solidus Ai Tech Next Week
The upcoming token unlocks for Metars Genesis, ApeX, and Solidus Ai Tech present significant risks for traders. Each of these projects is expected to release a substantial portion of their total supply into the market, potentially leading to price declines due to increased selling pressure. Low liquidity and unfavorable tokenomics further amplify the risks for these cryptocurrencies.
By understanding token unlock dynamics, liquidity, and tokenomics, traders can better navigate these events and avoid potential losses. Employing strategies such as selling before the unlock, short-term trading, and dollar-cost averaging can help mitigate risks in this volatile market. As always, conducting thorough research and staying informed about market conditions is essential for successful trading in the cryptocurrency space.