Optimism (OP) price slid Monday as the Ethereum scaling network’s native token braces for an increase in its circulating supply this week.
The token has a scheduled unlocking event this Saturday, according to Token.Unlocks, which will see the release of 24.16 million of OP or 3% of its circulating supply, worth roughly $30 million. Some $16 million of the assets will be issued to core contributors of the project, while $14 million were earmarked for investors.
Cryptocurrency projects often lock a part of the token’s supply and release it gradually to prevent early investors and insiders from selling in large quantities immediately after they get the allocations. When the tokens are unlocked, they become available to sell, and thus, such events are usually considered bearish; often they induce price drops. However, sometimes investors front-run and may sell before the unlocking happens.
OP has dropped 3.6% in the past 24 hours, CoinDesk Indices data shows, significantly underperforming mostly range-bound crypto markets. The broad market-proxy CoinDesk Market Index (CMI) is only down 0.5% during the same period, while the sectorial CoinDesk Smart Contract Platform Index (SMT), of which the OP token is a constituent, is roughly flat.
With today’s decline, the token has lost about 10% of its value in a week, the worst performer among the top 50 digital assets.
Crypto services provider Matrixport forecast in a report earlier this month that the price of alternative cryptocurrencies – altcoins – would likely struggle for the rest of the year against the largest crypto asset bitcoin (BTC), partly because token unlocks are weighing on the market.