Crypto: Altcoins Against the Wall Facing the Wave of New Tokens

The crypto market is preparing to face a new wave of turbulence. Several major token issuances are scheduled in the days ahead, raising investor concerns about their potential impact on prices. This situation arises as the market as a whole struggles to find stable equilibrium.

A Programmed Inflation Source of Concerns

Managing the circulating supply is a major challenge for most altcoins. While the issuance of new tokens aims to support the development and adoption of the projects concerned, it raises concerns about their impact on valuations.

This issue is particularly visible in the case of XRP: although its overall valuation reached peaks in 2021, the oversupply of tokens in circulation kept its individual price below $1.35.

This phenomenon is not isolated. Promising crypto projects like Avalanche (AVAX) have to deal with an annual growth of their supply exceeding 10%, which inevitably hinders their market progress.

The schedule for the coming weeks includes several significant new token injections. For example, the Optimism (OP) platform is set to introduce an additional 10 million tokens in mid-July, increasing its supply by about 1%. Meanwhile, Starknet (STRK) is considering a more substantial expansion with 64 million additional tokens, representing a 5% increase in its circulating supply.

Various Strategies in Response to the Influx of New Tokens

Projects adopt different approaches to manage these issuances. Arbitrum (ARB), one of the main Ethereum scaling solutions, is about to distribute 92.6 million tokens to its team and investors. This decision comes as ARB’s price trades near its historical lows, raising questions about the chosen timing.

Others are betting on these issuances to reignite interest in their ecosystem. Axie Infinity (AXS), struggling since the GameFi sector downturn, will distribute 2.45 million tokens as staking rewards. ApeCoin (APE) will follow a similar strategy with the issuance of 15.6 million tokens, hoping to revive enthusiasm for the project.

In a bull market, these issuances might have stimulated prices in the medium term. However, the current situation reverses this dynamic. Teams and investors seek to maximize their sales, exerting additional pressure on already fragile prices.

The influx of new tokens in a bearish crypto market represents a major challenge for these altcoins. Their ability to absorb this additional supply without price collapse will be a crucial test of their resilience and attractiveness to investors.