TIA is about to unlock a huge amount. Will it cause market panic?

Written by: 1912212.eth, Foresight News

Large amounts of token unlocking always cause considerable concern in the market.

The modular leader Celestia's token TIA will unlock 175.74 million tokens on October 31. If calculated at a unit price of $6, the unlocking value exceeds $1 billion. This unlocking amount accounts for 16.3% of its total supply and 80.07% of the current circulation. As of press time, the price of TIA has rebounded above $6, and is currently priced at $6.16, with a daily increase of about 3%.

In addition, among this part of the unlocked tokens, the investors' share of the seed round, round A and round B reached 117.38 million tokens, which is a huge amount.

Such a huge unlocking has attracted widespread attention from the market. Will VCs sell immediately after unlocking? Will there be a big correction in the price of the currency? It has become a common concern in the market.

Celestia Development Status

Since Celestia pioneered the concept of modularization, it has attracted much attention and heated discussion in the market. Celestia is a modular infrastructure designed for the Data Availability Network (DA). Compared with the current largest DA layer Ethereum mainnet in the industry, it can reduce data costs by 99.9%.

According to Blockwork Research data, as of mid-September, its data release ratio has reached 57%, and its cost is only $243, which is 1% of the Ethereum mainnet cost. Since the launch of the mainnet, Celestia has supported more than 20 Rollups deployments.

As of October this year, Celestia's current maximum throughput is 2MB/12 seconds, or 0.167MB/s. For this reason, Celestia's core development community recently announced a roadmap to massively expand the data throughput of the server, with a goal of 1GB.

Announce financing in advance

Before the large amount of tokens are unlocked, the project party announces the roadmap and financing news, which often plays a certain role in boosting the stability of the currency price.

Celestia's financing journey was not smooth at the beginning, and it was rejected by investors many times in 2019. After the modular narrative and the agreement gained a foothold, Celestia completed US$55 million in financing in October 2022. In September 2024, the Celestia Foundation completed another US$100 million in financing, and many star institutions followed up and increased their bets. After the financing news was announced, TIA once soared 24% on the same day, rushing above US$6.5.

However, just as the community was cheering for it, investor Sisyphus revealed that its financing was actually an over-the-counter transaction directly reached by the foundation with several institutions a few months ago. At that time, the financing valuation was 3.5 billion US dollars, and these token shares may be unlocked in October. Sisyphus also added that if institutions can sell all unlocked assets at a price of 7.5 US dollars, they can break even.

The short-term craze has returned to silence.

Negative impact may be digested

TIA's self-modularization craze and the big market have risen from around 2 US dollars at the end of last year to above 21 US dollars. Then it continued to fall, the lowest rebounded to below 4 US dollars, and now it has fallen back to around 6 US dollars.

Generally speaking, large unlocking and a large share of the team and investors in the unlocking shares will have an adverse effect. Community participants naturally believe that once the issue is resolved, VCs will sell off immediately without mercy.

News about the massive token unlocking will begin to spread widely about a month in advance, and the market will begin to prepare for these news in two to three weeks. Hesitant funds often begin to adjust their positions in the weeks leading up to the unlocking to prevent large fluctuations.

Messari pointed out in a research report that unlocking more than 5% of the circulating supply will significantly affect the performance of tokens, and the token price will perform poorly within 7 days before and after the unlocking event.

So what will happen to the TIA unlocking this time?

Chris Burniske, a well-known long Placeholder partner, once analyzed TIA on Twitter that some investors will regret not buying below $5 when TIA rises. Chris bought a large amount of SOL when it fell below $10 at the end of 2022, and waved the flag and shouted. He became famous for his correct judgment of bulls and bears.

In the long push, Chris said that the negative impact of TIA's large unlocking was seriously exaggerated.

• Celestia's ecosystem is still developing, and its ideologically firm and diverse developers are full of enthusiasm; it reminds it of early Bitcoin, Ethereum, and Solana.

• Those so-called "evil VCs" who have unlocked tokens are unlikely to sell out in October because they see that their team's ecosystem is growing, and many of TIA's biggest supporters are not as short-term-oriented as many people say.

• When the unlocking occurs, the market may realize that the selling pressure is much less than expected for these airdrops, and if the longs have not been liquidated before, then the airdrops may be liquidated.

• Those buyers who are marginalized and hesitant because of concerns about unlocking will start to take "buy" actions after seeing the positive price trend and reducing uncertainty.

Chris also mentioned that in the past cycle, SOL also unlocked 80% of the total supply in December 2020. Although it ushered in a pullback after the unlocking, SOL once again soared more than 100 times in 2021. However, some people expressed doubts. David Hoffman, founder of Blankless, commented, "I'm not sure if it's really appropriate to compare the best performing targets in 2021." At present, it remains to be seen whether TIA can replicate the rise of SOL. However, if the price of the currency does not fall sharply after unlocking and stabilizes in the range, it will undoubtedly have a positive impact on the subsequent trend. TIA staking rewards may reduce selling pressure. At present, in mainstream exchanges, such as Binance TIA, the annualized return on current financial management is as high as 14.36%, Bybit is 11%, and the current annualized return on OKX is also around 20%.

Off-chain returns are relatively good, but what about on-chain returns? Taking Stride as an example, its annualized return is 9.45%, and Keplr wallet is 10.61%. With a high annualized rate and the market generally predicting that the whole is at the beginning of a new round of bull market, some funds may still choose to pledge and wait.

It is worth mentioning that many modular concept projects have issued airdrops to TIA chain pledgers. If history repeats itself, it may attract some pledged funds again.

Recent performance of other large token unlocking

When we are not sure what will happen, looking back at the history that happened in the past is a way.

On October 1, the popular public chain SUI unlocked about 64.19 million tokens, worth about $120 million. Among the unlocked tokens, investors unlocked 39.16 million tokens, accounting for more than half of the total unlocked tokens.

However, SUI did not fluctuate significantly, falling from $1.93 to $1.65 on the same day, a drop of only 0.97%. Although there were some subsequent pullbacks, the price trend was extremely strong. A week after the unlocking, on October 13, it even hit a record high of $2.368.

Another MOVE public chain APT also unlocked 11.31 million tokens on October 12, worth about $100 million, of which investors unlocked 2.81 million tokens.

The market price did not fall on the same day but soared by 16.55%, once reaching around $10. On October 22, the APT coin price jumped above $11, setting a new high since May 2024.

Even the long-sluggish second-layer token track ARB rose slightly after unlocking, and there was no so-called big drop. ARB unlocked 92.65 million tokens on October 16, worth approximately $49.4 million.

On the day of unlocking and the next day, ARB experienced a total decline of about 3.7%, from $0.58 to $0.54, and soon after three consecutive increases, the price rose to above $0.6.

Summary

The performance of tokens after large amounts of tokens are unlocked is often affected by a combination of factors, such as track, unlocking share, ecological development, project progress, community atmosphere, etc. Of course, whether the overall market trend is upward or downward also has a considerable impact on prices. During the bear market, buying is weak, and the negative impact of large unlocking will cause considerable selling pressure. However, once the market returns to the bull market, it is not uncommon for tokens to soar immediately after unlocking. Investors need to make comprehensive analysis and judgment to seize market opportunities.