Crypto: Altcoins at the Foot of the Wall Facing the Wave of New Tokens

The crypto market is set to face another wave of turbulence. Several major token offerings are scheduled to take place in the coming days, raising concerns among investors about their potential impact on prices. This comes as the market as a whole struggles to find a stable equilibrium.

Planned inflation a source of concern

Managing circulating supply is a major challenge for most altcoins. While new token issuances are intended to support the development and adoption of the projects involved, they raise concerns about their impact on valuations.

This problem is particularly visible in the case of XRP: although its overall valuation has reached record highs in 2021, the glut of tokens in circulation has 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 of more than 10%, which inevitably slows down their progress on the market.

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

Varied strategies in the face of the influx of new tokens

Projects are taking different approaches to managing these issuances. Arbitrum (ARB), a leading Ethereum scaling solution, is set to distribute 92.6 million tokens to its team and investors. The move comes as ARB’s price hovers near all-time lows, raising questions about the timing.

Others are banking on these issuances to revive interest around their ecosystem. Axie Infinity (AXS), which has been struggling since the decline of the GameFi sector, will distribute 2.45 million tokens in staking rewards. ApeCoin (APE) will follow a similar strategy with the issuance of 15.6 million tokens, in the hopes of rekindling the excitement around the project.

In a bull market, these issues could have boosted prices in the medium term. However, the current situation is reversing this dynamic. Teams and investors are looking to maximize their sales, putting additional pressure on already fragile prices.

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