3 Cryptos That May Continue to Dump in 2023

Published on:

  • The injection of millions of DeFi tokens into the crypto market in 2023 could see several major selloffs.
  • Crypto projects release tokens into the market based on a predetermined vesting schedule that is designed to instill confidence in investors.
  • Token releases can spark selling pressure if macroeconomic conditions are unfavorable.

The unlocking of millions of dollars worth of DeFi tokens in 2023 could spark a significant selloff as investors dump risky assets during an extended bear market.

Several crypto projects, including move-to-earn project Sweatcoin and metaverse-focused Yuga Labs, will release additional tokens into circulation based on a vesting schedule in 2023, despite much of the crypto market still feeling the effects of the collapses of significant crypto firms, including Three Arrows Capital, Celsius, and FTX.

Vesting Schedules in Crypto Projects

Projects lock their native token into special “vesting” smart contracts to ensure the controlled release of their token at predetermined dates. A vesting schedule also reassures investors that the project’s creators are committed to fulfilling the project’s ultimate goal.

While a token release increases a token’s market cap, investors often sell their new tokens during difficult macroeconomic conditions, resulting in price dumps.

Price data surrounding previous token releases often provides a window into the effects of future releases. Here, we look at the potential for major sell-offs of three cryptos slated for major token releases in 2023.

Read more:  Bonk Coin Sparks Interest Back into Solana Ecosystem