Will the imminent massive unlocking of TIA trigger market panic

Token unlocking of a large scale always triggers concerns in the market.
Celestia, a modular leader, is about to unlock 175.74 million tokens on October 31st, with a value of over 1 billion US dollars if calculated at a unit price of 6 US dollars. This unlocking quantity accounts for 16.3% of its total supply and 80.07% of the current circulation. As of the time of writing, the price of TIA has risen to above 6 US dollars, with the current price at 6.16 US dollars, a daily increase of about 3%.
In addition, among the unlocked tokens, the shares of seed round, A round, and B round investors reach 117.38 million tokens, which is a substantial amount.
Such a large unlocking has attracted widespread attention in the market. Will VCs unlock and sell? Will there be a significant price correction? These are the common concerns in the market.
Recent Developments of Celestia
Since the inception of the modular concept by Celestia, it has received a lot of attention from the market. Celestia is a modular infrastructure designed for Data Availability network (DA), which can reduce data costs by 99.9% compared to the largest DA layer Ethereum mainnet in the industry.
According to Blockwork Research data, as of mid-September, its data publishing ratio has reached a record 57%, with a cost of only $243, accounting for 1% of the cost of the Ethereum mainnet. Since the launch of the mainnet, Celestia has supported the deployment of more than 20 Rollups.
As of October this year, Celestia’s current maximum throughput is 2MB/12 seconds, or 0.167MB/s. Therefore, recently, Celestia’s core development community has released a roadmap to greatly expand the data throughput of the amplifiers, with a target of 1GB.
Early Announcement of Financing
Before the large token unlocking, the release of the roadmap and financing news by the project party often has a certain stabilizing effect on the token price.
Celestia’s initial financing road was not smooth. In 2019, it was rejected by investors multiple times. After establishing the modular narrative and protocol, Celestia completed a $55 million financing in October 2022. In September 2024, the Celestia Foundation completed another $100 million financing, with participation from several star institutions. After the financing news was announced, TIA once surged by 24% on the same day, rising above $6.5.
However, just as the community was cheering for it, investor Sisyphus revealed that the financing was actually an over-the-counter transaction reached between the foundation and several institutions months ago, with a valuation of $3.5 billion at the time. These token shares may be unlocked in October. Sisyphus also added that if the institutions can sell all the unlocked assets at a price of $7.5, they can break even.
The short-term hype has returned to silence.
Negative Impact may be Absorbed
TIA has risen from around $2 at the end of last year to above $21 under the combined trend of the modular concept and the bull market. It has since experienced continuous decline, bottoming out below $4, and now has fallen back to around $6.
Generally speaking, large token unlocking and the large shares of teams and investors in the unlocking will have negative effects. Participants in the community, in the so-called anti-VC trend, naturally believe that VCs will sell as soon as the unlocking happens.
The news of the large token unlocking will be widely spread about a month in advance, and the market will start preparing for these news in two to three weeks. Hesitant funds will often adjust their positions in the weeks leading up to the unlocking to prevent significant fluctuations.
According to a research report by Messari, unlocking more than 5% of the circulating supply will significantly affect the token performance, and the token price tends to perform poorly in the 7 days before and after the unlocking event.
So, how will the TIA unlocking go this time?
Chris Burniske, a well-known bull and partner at Placeholder, analyzed TIA in a tweet, saying that some investors will regret not buying at below $5 when TIA rises. Chris previously made a big purchase when SOL fell below $10 at the end of 2022 and gained a lot of fame for his accurate bullish and bearish judgments.
In a long tweet, Chris said that the negative impact of the large TIA unlocking has been greatly exaggerated.
Celestia’s ecosystem is still developing, with enthusiastic and ideologically diverse developers reminding him of early Bitcoin, Ethereum, and Solana.
Those so-called “evil VCs” who are supposed to receive unlocked tokens are unlikely to sell off in October, as they see that the ecosystem of the Celestia team is growing and many of TIA’s biggest supporters do not prioritize short-term gains as many people say.
When the unlocking happens, the market may realize that the selling pressure is much smaller than expected, and if the longs haven’t been liquidated before, the shorts may be liquidated.
Buyers who have been marginalized and hesitant due to unlocking concerns may start taking action and buying when they see a positive price trend.
Chris also mentioned that SOL had previously unlocked 80% of its total supply in December 2020. Although it experienced a correction after the unlocking, SOL skyrocketed again by over 100 times in 2021. However, some people express doubt, and David Hoffman, the founder of Blankless, commented, “Is it appropriate to compare with the best-performing target in 2021?”
Currently, whether TIA can replicate the path of SOL’s rise remains to be seen, but if the price does not experience a significant decline after unlocking and stabilizes within a range, it will undoubtedly have a positive impact on future trends.
Staking Rewards of TIA may Alleviate Selling Pressure
Currently, on mainstream exchanges, such as Binance, the annualized yield of TIA’s current account wealth management is as high as 14.36%, 11% on Bybit, and the current account annualized yield on OKX is around 20%.
The off-chain yields are relatively good, what about on-chain yields? Taking Stride as an example, its annualized yield reaches 9.45%, and Keplr Wallet reaches 10.61%. With high annualized rates, combined with the general market estimation that it is still at the beginning of a new bull market, some funds may still choose to stake and wait.
It is worth mentioning that many previous modular concept projects have distributed airdrops to TIA stakers. If history repeats itself, it may attract some staking funds again.
Recent Performance of Other Large Token Unlocks
When we are uncertain about what will happen, looking back at past history is a way to gain insights.
On October 1st, the popular public chain SUI unlocked approximately 64.19 million tokens, worth about 120 million US dollars. Among the unlocked tokens, the tokens unlocked by investors reached 39.16 million, accounting for more than half of the total unlocked amount.
However, SUI did not experience significant fluctuations, with a daily drop from $1.93 to $1.65, a decrease of only 0.97%. Although there were some subsequent corrections, the price trend was extremely strong. On October 13th, just one week after the unlocking, it even reached a historical high of $2.368.
Another MOVE-based public chain, APT, also unlocked 11.31 million tokens on October 12th, worth about 100 million US dollars, with investors unlocking 2.81 million tokens.
The market price performance surged 16.55% on the same day, reaching nearly $10 at one point. On October 22nd, APT’s price jumped above $11, reaching a new high since May 2024.
Even the second-layer token ARB, which has been in a long period of stagnation, also saw a slight increase after unlocking and did not experience a significant drop. ARB unlocked 92.65 million tokens on October 16th, worth about $49.4 million.
On the day of unlocking and the next day, ARB experienced a total drop of about 3.7%, from $0.58 to $0.54, but soon after, it continued to rise and the price reached above $0.6.
Summary
The performance of tokens after large token unlocks is often influenced by various factors, such as the track, unlocking shares, ecosystem development, project progress, and community atmosphere. Of course, the overall market trend, whether it is upward or downward, also has a significant impact on prices. During a bear market, with weaker buying pressure, the negative impact of large token unlocks can cause significant selling pressure. However, once the market returns to a bull market, examples of tokens skyrocketing after unlocking are not uncommon. Investors need to analyze and judge comprehensively to seize market opportunities.