Sonic’s $74.59M Token Unlock: A Recipe for Disaster? ๐Ÿšจ

  • A whopping $74.59 million worth of S tokens has been unleashed upon the world, increasing the circulating supply by a not-too-shabby 7.39% ๐Ÿค‘.
  • Market participants, being the clever chaps they are, have already begun selling the asset, adding a dash of downward pressure to its performance ๐Ÿ“‰.

It appears that Sonic [S] has hit a bit of a snag, old bean. A major token unlock has gone live, injecting a cool $74.59 million worth of tokens into circulation. According to the chaps at DeFiLlama, this accounts for 5.17% of the total supply and 7.39% of the circulating supply ๐Ÿคฏ.

Now, one might think that this sudden increase in float would be a jolly good thing, but alas, it’s raised concerns about a potential supply glut ๐Ÿคฆโ€โ™‚๏ธ. Unless matched by proportional demand, the imbalance could trigger further downside across spot and derivatives markets ๐Ÿ“Š.

This increase in float suggests that if supply outweighs demand, it could lead to a market-wide selloff ๐Ÿšจ. AMBCrypto analysis found that the likelihood of an equal surge in demand remains slim ๐Ÿค”.

DeFi Investors Make a Quick Exit ๐Ÿƒโ€โ™‚๏ธ

At the time of writing, a selloff was already underway ๐Ÿ“‰. Notably, decentralized finance (DeFi) investors have been reducing their exposure to S tokens ๐Ÿ’ธ.

Between the 3rd and 5th of July, DeFi wallet holders offloaded a whopping $37.9 million worth of S tokens ๐Ÿ’ธ. Their cumulative holdings dropped from $836.44 million to $798.49 million ๐Ÿ“Š.

This outflow indicates that investors are unlocking S across multiple platforms and withdrawing their assets, implying a shift from long-term holding to a more bearish, sell-oriented sentiment ๐Ÿ“‰.

Sellers Dominate the Market ๐Ÿš€

On-chain metrics showed the trend wasnโ€™t isolated ๐Ÿค. Retail investors followed suit ๐Ÿ‘ฅ.

According to CoinGlassโ€™ Exchange Netflow data, there was a significant outflow of assets over the past week, totaling $427,000 moved from private wallets to exchanges ๐Ÿ“ˆ.

The most notable selloff occurred within the past 24 hours, during which spot investors sold approximately $110,000 worth of S crypto, accounting for more than 25% of the weekโ€™s total outflows ๐Ÿ“Š.

Liquidation data from Coinalyze further confirmed bearish sentiment in the perpetual markets ๐Ÿ“‰.

In the perpetuals market, long traders saw $182,800 in liquidations, while shorts lost just $8.4 ๐Ÿค‘.

The takeaway? For every $1 wiped from bearish traders, bullish longs were hit for over $21,000 ๐Ÿคฏ. Such a lopsided ratio implied a market tilted heavily in favor of sellers ๐Ÿ“Š.

A Blast from the Past: January’s Unlock ๐Ÿ“†

AMBCrypto analyzed Sโ€™s performance during its last major token unlock to determine whether a similar pattern could emerge ๐Ÿ”ฎ.

During the unlock event on the 4th of Januaryโ€”when $998.72 million worth of Sonic token entered circulationโ€”the token experienced a notable drop ๐Ÿ“‰.

From a local high on the 4th of January, S token declined 13.5% by the 7th ๐Ÿ“Š. By the 20th of January, it had recorded a cumulative decline of 42.75% after forming a local low ๐Ÿ“‰.

At press time, S created a local high on the 25th of June ๐Ÿ“†. While this does not confirm an impending price drop, a break below the support level at $0.3022 could signal the formation of a local lower low ๐Ÿ“Š.

Given the prevailing bearish trend and additional supply pressure expected from the token unlock, S is likely to break down and form a new lower low ๐Ÿ“‰.

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2025-07-06 02:26