Aptos, a Layer 1 protocol founded by former Facebook employees, is gearing up to release 20 million Aptos (APT) tokens in November, a development that has garnered significant attention in the crypto market.
The impending token unlock, valued at $103 million based on APT’s current market price of $5.15, represents more than 8.5% of Aptos’ total circulating supply of 235.02 million tokens.
Token unlocks are a common practice in the crypto world, designed to prevent significant holders like early investors and project team members from unloading their holdings simultaneously. This move could trigger a sharp market decline.
According to research firm The Tie, Aptos’ scheduled token unlock in November is expected to inject substantial liquidity into the market. The 20 million APT tokens set to be released represent 112% of the average daily trading volume observed over the previous 30 days, as detailed in The Tie’s weekly newsletter dated September 13th.
What makes this situation even more noteworthy is that these token unlocks will occur on a recurring monthly basis and coincide with monthly staking reward releases.
In November, 5.83 million APT tokens, equivalent to 32% of the daily average volume, will be unlocked, with this figure set to increase to 6.15 million APT in December. Additionally, 4.62 million APT tokens have been unlocked monthly since last year for community and foundation-related purposes.
The Tie further emphasizes that token unlocks releasing liquidity beyond 100% of the average daily trading volume tend to exert downward pressure on prices. This observation raises concerns among market participants.
Moreover, data from the perpetual futures market tied to APT reveals that crypto traders have adopted a bearish stance toward cryptocurrency.
Open-interest-weighted funding rates have reached their most harmful levels since February, implying that shorts are paying longs to maintain their bearish positions.
The rise in open interest, representing the number of active contracts, to 5.33 million APT tokens on Wednesday, the highest since August 17th, is notable. Combined with the negative funding rates, it suggests that leverage in the market is skewed toward bearish positions.
As the date of the token unlock approaches, the crypto community will be closely monitoring the impact of this event on Aptos’ price and market dynamics, as well as the broader implications for the crypto space.