Optimism’s native token OP is facing a precarious situation as millions of tokens are set to be released into circulation. This development poses a threat to the price of the altcoin, which has already been spiraling downwards since the third airdrop.
In its latest token unlocking event, the Optimism network is expecting over 24 million tokens to be unlocked and brought into circulation. The on-chain token tracking website, Token Unlocks, reports that at current prices, these 24.16 million tokens are worth approximately $30.7 million.
The token unlocking event is scheduled for September 30th, less than four days after the editorial deadline. This means that 3.03% of the total OP supply will be released into circulation all at once.
This comes just a month after the network locked a similar amount on August 30th. Similar to the unlocking in August, the 24.16 million tokens will be allocated to two groups. 12.75 million tokens worth $16.19 million will go to primary contributors, while 11.41 million tokens worth $14.49 million will go to investors.
The Optimism unlocking event is the largest among the token unlocking events expected in the next seven days, which together amount to over $54 million. Other notable unlockings include SUI, which will unlock 4.9% of its supply worth $16.92 million, and Yield Guild Games (YGG), which will unlock 6.7% of its supply worth $2.55 million.
Measuring the impact on the OP price
A good way to gauge how the OP price could react is to look at historical performance during similar events. In the case of the OP price, there’s no need to look too far back as the last token unlocking event took place just a month ago.
On August 30th, Optimism unlocked an identical number of tokens, and the price responded negatively to this new supply. Initially, OP remained close to the $1.50 mark, but once the unlocking was completed, the token’s price plummeted, dropping from $1.50 to $1.30 within two days.
This indicates that token unlocking events, especially given the size of the upcoming Optimism unlocking, inherently have a negative impact on price. If the historical pattern continues, the OP price could easily succumb to bearish pressure and jeopardize the $1 mark. At the very least, the impact of this new supply could lead to a 10% decline, pushing the OP price just above $1.10.
OP is already feeling the effects of the impending bearish sentiment. In the last week, the price has declined by over 10% and is currently below the resistance level of $1.30.
The OP price is now facing a new threat with the upcoming unlocking event.
