Is $ARB About to Dump? 1.1 Billion Tokens Releasing This Week

by BSC News

March 11, 2024


The distribution includes 673.5 million tokens for the team and advisers, valued at $1.38 billion, and 438.25 million tokens, worth around $899 million, for investors.

Layer-2 blockchain network Arbitrum is gearing up for a significant milestone on March 16 as it prepares to unlock $2.25 billion worth of vested Arbitrum (ARB) tokens. This move is set to unleash approximately 1.1 billion ARB tokens into the market, constituting about 76% of the circulating supply of the token.

Data from digital asset tracker Token Unlocks sheds light on the impending release. Arbitrum plans to distribute 673.5 million tokens, valued at roughly $1.38 billion, to its team and advisers. Additionally, around 438.25 million tokens, worth approximately $899 million, will be allocated to its investors.

This release mechanism follows the format of a "Cliff Unlock," wherein no tokens are initially distributed until the predetermined unlock date. Consequently, a significant volume of tokens will be injected into the market on the specified release day. 

Such strategies are commonplace in the crypto sphere, aimed at mitigating the risk of market destabilization caused by sudden influxes of tokens.

Market Speculation and Investor Sentiment

The prospect of a substantial token unlock stirs speculation and investor sentiment. It is often feared that early investors and insiders may flood the market with unlocked tokens, potentially driving prices down.

Yet, the precise impact of token unlocks remains uncertain, influenced by a myriad of factors. According to Token Unlocks' annual report, tokens typically witness a 34% increase in value following their release to private investors.

In the case of Arbitrum, the unlock will unfold gradually over four years, with tokens unfrozen every four weeks. 

Divergent Perspectives and Market Dynamics

Opinions within the crypto community regarding the impending unlock vary. Some anticipate a surge in short positions against the token on March 16, while others have already opted to sell their holdings in anticipation of the event.

Notably, crypto influencer JJcycles draws parallels with Solana's token unlock during a previous cycle. 

Contrary to expectations, Solana's token price soared following the release of vested tokens, presenting an alternative narrative to the anticipated price drop. 

Some also believe that the unlock is already priced in, and will therefore have little impact on the asset's price once it occurs.

When we compare the Arbitrum token supply with Optimism which is also a Layer-2 network, we see that Optimism has a market cap of $4.4 billion and a circulating supply of 23.43 %. While Arbitrum's market cap is currently $2.6 billion, it will increase to $4.8 billion at current prices with a 23.8% circulating supply once the tokens are unlocked. 

Worth noting, Arbitrum has a total value locked (TVL) of $3.66 billion and Optimism has a TVL of $1.04 billion, according to DeFiLlama.  

Whale Movements and Market Observations

That being said, recent on-chain data reveals notable whale activity surrounding ARB tokens. According to Spot On Chain two prominent investors deposited a combined total of 2.77 million ARB into Binance, signaling potential profit opportunities. As of press time, the amount transferred was worth $5.67 million.

With one whale standing to gain more than $608k in profits from their transaction and another to profit by $2.70 million.

Only time will tell whether we will see a price dump in the coming days.

As of now, ARB is trading at approximately $2.05, with almost no change over the last 24 hours. 


Disclaimer: The views expressed in this article do not necessarily represent the views of BSCNews. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. BSCNews assumes no responsibility for any investment decisions made based on the information provided in this article

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