Celestia could face potential selling pressure by the end of October due to its major token unlock event, Illia Otychenko, Lead Analyst at CEX.IO, told crypto.news.
On Oct. 30, 175 million Celestia (TIA) tokens, accounting for 16.4% of its total supply, will enter its circulating supply as the modular blockchain becomes one-year-old. These coins are valued at roughly $1 billion at current price levels.
Otychenko pointed out three key points that could trigger bearish momentum for the TIA price in the upcoming token unlock event:
- Early unlock: The network launched just a year ago, and this is its first major unlock since the initial launch. Additionally, the Oct. 30 release marks the beginning of subsequent monthly unlocks. Historically, tokens that have distributed less than 70% of their total supply tend to have larger volatility during their unlocking events, according to the 6MV report.
- Large unlock: TIA is set to nearly double its circulating supply in a single event as its circulating supply will increase by 82% — far beyond the 1% threshold where negative price impact typically begins to emerge.
- Profit-taking opportunity: Approximately 67% of tokens within the upcoming unlock will go to seed and series A and B investors, who are currently sitting on 59,400% and 1,800% profits, respectively.
The CEX.IO lead analyst says that “with TIA underperforming in 2024,” down by 70% from its all-time high of $20.9 in February, “these early investors might be inclined to sell.”
According to Otychenko’s analysis, the activity on the Celestia network has significantly increased this year while its fees have declined. This shows reduced revenue and short-term pressure on the TIA token, but for the long term, “this dynamic can be a positive signal.”
Moreover, the analyst explains that TIA could face a short squeeze due to the massive token unlock event and potential profit-taking from early investors.
“If Celestia does not see a surge in positive activity after the token unlock, or if a broader altcoin rally does not materialize to support the asset, the TIA token could face a price decline exceeding 20% following the release.”
Otychenko told crypto.news.
On Sept. 23, the Celestia Foundation announced a $100 million funding round, led by Bain Capital Crypto. This helped the TIA price surge 14% in less than 24 hours as the positive sentiment surrounding the asset significantly increased.
TIA is up by 3.4% in the past 24 hours and is trading at $6.12 at the time of writing. Its market cap is currently sitting at $1.33 billion with a daily trading volume of $227 million.
