Altcoin rally cools as $650 million worth of tokens unlocked

• Crypto tokens DYDX, OP, and SUI fell sharply ahead of a large token unlock, underperforming the broader Coindesk market index.

• Unlocking increases the supply of the digital asset and allows early investors to sell tokens.
  

Several major alternative cryptocurrencies, including dYdX (DYDX), Optimism (OP), and Sui (SUI), fell on Monday as a large number of token unlocks weighed on prices amid overall poor performance across the cryptocurrency market.

According to data from Token.Unlocks and CryptoRank, altcoin supply is set to increase by nearly $650 million this week.

DYDX’s circulating supply will increase by approximately $480 million worth of tokens, nearly doubling the amount of tokens currently on the market. OP, SUI, Axelar (AXL), Immutable X (IMX), 1inch (1INCH), and Hedera (HBAR) are also scheduled to undergo large-scale unlocks in the coming days.

Token unlocking means an increase in the supply of an asset, releasing tokens from the vesting period, including to early investors. A study earlier this year by crypto analytics firm The Tie found that large unlocking events typically lead to price declines because supply growth outstrips investor demand for the asset.

Axelar (AXL) has fallen 10% over the past 24 hours, according to CryptoRank data, as Monday marked the scheduled monthly token unlock period, with about $18 million worth of tokens (about 5% of its market value) added to its supply, including from early investors.

Prior to the issuance of $480 million worth of tokens on December 1, DYDX was down 7% over the same period.

OP fell nearly 6%, with $40 million worth of tokens set to unlock on November 30.

SUI plunged 8.8% on the day as its supply is set to increase by $48 million this week.

On December 1, 1INCH fell more than 4%, and its supply is expected to increase by nearly 10%, or $33 million. HBAR and IMX fell 2%-3%, and each faces unlocking $11 million in tokens this week.

Meanwhile, Bitcoin (BTC) fell 0.7% over the same period, while the broad-market cryptocurrency index, the CoinDesk Market Index (CMI), fell 1.5%.