(Bloomberg) -- Selling by some initial investors and founders in various projects appears to be helping to bring on an early “crypto winter” for digital tokens such as Avalanche, DYDX and PYTH that are dubbed altcoins.

Since Bitcoin’s price peaked in March, the market capitalization of altcoins other than Ether or stablecoins has fallen by almost 30%, according to crypto market data tracker CoinMarketCap. In the early days of crypto, all tokens besides Bitcoin were slapped with the nickname because they were an alternative to the original digital currency, which still commands more than 50% of the estimated $2.4 trillion digital-asset market. 

A portion of many projects’ tokens is becoming “unlocked” this year, which essentially means that venture capitalists and founders can finally sell the digital assets they received years ago in exchange for investing or work contributions. With the crypto market recovering from the crypto winter, or prolonged decline in prices, of two years ago, the rebound makes now an attractive time to sell for many long-term investors. Out of 138 tokens that researcher TokenUnlocks tracks, 120 have unlocks this year, with a combined market valued at about $58 billion. 

“Given these unlock days are publicly known, downside price reflexivity can be exacerbated as non-VC holders look to front-run anticipated selling from unlocking VCs,” said Edward Chin, co-founder of Parataxis Capital. “You can also see the downstream impact of these cliffs in the OTC market, as brokers are often tasked with offering locked tokens from early investors or employees looking to gain liquidity at steep discounts to spot prices, often at discounts in excess of 40% to spot.”

While unlocks-based selling is likely only one contributing factor, the price of DYDX, the token linked to the crypto exchange of the same name, has more than halved since mid-March, according to CoinMarketCap. The same happened with AVAX, the token of Avalanche, while PYTH is a third of what it was, according to the data tracker. All three tokens had unlocks in May, TokenUnlocks says.

While coin unlocks actually helped to boost prices in 2023, both “VCs and public participants are becoming more aware of token unlocks and supply-side data,” said Tanawat Chiewhawan, chief executive officer of TokenUnlocks. “Most market participants take shorter-term gain more than hold for long-term gain for altcoin with unlocks.”

Of the roughly 90 top non-stablecoin assets tracked on centralized exchanges, only 12 posted positive returns since March 14, the day Bitcoin hit an all-time high, while 81 have recorded negative returns, according to data researcher CCData. Bitcoin has dropped around 12% since reaching almost $74,000, while 61 of the top 100 tokens have declined by more than 25%. And 23 of the digital assets have dropped by more than 50%, CCData data show.

Other factors have played a role in driving down altcoin prices as well. Many are correlated with prices of major network tokens such as Ether or Solana, and when they decline, the smaller altcoins are typically the first to be sold, Chin said. But the unlocks exacerbate the selling pressure, he said.

“The market is strange at the moment, in that the many infrastructure projects that investors funded over the bear market are now coming to their token launch, but there is not a ton of regular buyers of these tokens at high prices,” said tokenomics expert Lex Sokolin, co-founder of Generative Ventures. 

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