Will the impending massive unlocking of TIA cause market panic

CoinWorld News Report:
Written by: 1912212.eth, Foresight News
Token unlocks of massive amounts always cause concerns in the market.
Modular leader Celestia’s token TIA is set to unlock 175.74 million tokens on October 31st, with a value of over $1 billion if calculated at a single price of $6. This unlock accounts for 16.3% of its total supply and 80.07% of the current circulating supply. As of the time of writing, the price of TIA has risen above $6, currently at $6.16, with a daily increase of approximately 3%.
In addition, among the unlocked tokens, the shares of seed round, Series A, and Series B investors amount to 117.38 million tokens, which is a considerable amount.


Such a large unlock has attracted widespread attention from the market. Will the VCs unlock and sell? Will there be a significant price correction? These are the questions that the market is concerned about.
Recent Developments of Celestia
Since Celestia introduced the modular concept, it has received much attention and discussion in the market. Celestia is a modular infrastructure designed for Data Availability Networks (DA), which can reduce data costs by 99.9% compared to the largest DA layer of the Ethereum mainnet.


According to Blockwork Research data, as of mid-September, its data publishing ratio had reached 57%, with a cost of only $243, accounting for 1% of the Ethereum mainnet cost. Since its mainnet launch, Celestia has supported the deployment of over 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 released a roadmap to significantly expand data throughput, with a target of 1GB.
Early Announcement of Financing
Before the major token unlock, the project’s roadmap and financing news are often released, which can stabilize the token price.
Celestia initially faced difficulties in fundraising. It was rejected multiple times by investors in 2019. 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 announcement of the financing news, TIA surged by 24% in a single day, reaching 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 between the foundation and several institutions a few 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 achieve a break-even point.
The short-term hype quickly subsided.
Negative Impact may be Absorbed
In general, large token unlocks, especially those with significant shares held by teams and investors, can have detrimental effects. Participants in the community, in what is known as the “anti-VC” trend, naturally believe that once unlocked, VCs will immediately sell.
News of the massive token unlock will be widely circulated a month before and the market will begin to prepare for these news in two to three weeks. Hesitant funds will often adjust their positions in the weeks leading up to the unlock to prevent significant fluctuations.
According to a research report by Messari, unlocking more than 5% of the circulating supply significantly affects token performance, and within 7 days before and after the unlock event, token prices tend to underperform.
So, how will the TIA unlock unfold?
Prominent long investor Placeholder’s partner Chris Burniske analyzed TIA in a tweet, pointing out that some investors will regret not buying TIA below $5 when it rises. Chris previously made a big purchase when SOL fell below $10 at the end of 2022 and gained fame for his accurate bullish and bearish judgments.
In a lengthy tweet, Chris stated that the negative impact of the large TIA token unlock has been greatly exaggerated.
Celestia’s ecosystem is still growing, with passionate and ideologically diverse developers, reminding him of early Bitcoin, Ethereum, and Solana.
Those so-called “evil VCs” who receive unlocked tokens are unlikely to completely sell off in October because they see that the ecosystem of their teams is growing, and many of TIA’s biggest supporters do not prioritize short-term gains as many people claim.
When the unlock occurs, the market may realize that the selling pressure is much smaller than expected, and if the longs have not been liquidated before, the shorts may be liquidated.
Buyers who have been marginalized and hesitant due to unlock concerns may start to take action and “buy” when they see positive price trends.
Chris also mentioned that SOL also had an 80% unlock of its total supply in December 2020. Although it experienced a correction after the unlock, SOL rose more than 100 times in 2021. However, some people expressed doubts, and Blankless founder David Hoffman commented whether it is appropriate to compare with the best-performing assets in 2021.


Currently, it remains to be seen whether TIA can replicate SOL’s upward path, but if the price does not experience a significant decline after the unlock and stabilizes within a range, it undoubtedly has a positive impact on future trends.
Staking Rewards of TIA may Alleviate Selling Pressure
Currently, in mainstream exchanges, the annualized yield of TIA’s flexible savings is as high as 14.36% on Binance, 11% on Bybit, and the flexible annualized yield on OKX is around 20%.
The off-chain yield is relatively good, but what about on-chain? Taking Stride as an example, its annualized yield reaches 9.45%, and the Keplr wallet reaches 10.61%. With high annualized rates and the general estimation that the market is in 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 staking funds again.
Recent Performance of Other Large Token Unlocks
When we are uncertain about what might happen, looking back at past history can be a useful method.
Popular public chain SUI unlocked approximately 64.19 million tokens worth about $120 million on October 1st. Among the unlocked tokens, investors unlocked 39.16 million tokens, accounting for more than half of the total unlock.


However, SUI did not experience significant fluctuations. It fell from $1.93 to $1.65 on the same day, with a decrease of only 0.97%. Although there were subsequent corrections, the price trend remained strong. On October 13th, just one week after the unlock, it even reached a historical high of $2.368.
Another MOVE-based public chain APT also unlocked 11.31 million tokens worth about $100 million on October 12th, with investors unlocking 2.81 million tokens.


The market price surged by 16.55% on the same day, reaching nearly $10. On October 22nd, the APT price soared above $11, reaching a new high since May 2024.
Even the long-depressed layer 2 token ARB also experienced a slight increase after the unlock and did not see a significant drop as expected. ARB unlocked 92.65 million tokens worth about $49.4 million on October 16th.


On the day of the unlock and the following day, ARB experienced a total decline of about 3.7%, falling from $0.58 to below $0.54. However, it quickly rebounded and rose above $0.6 in the following three days.
Conclusion
The performance of tokens after large unlocks is often influenced by various factors, such as the track, unlock shares, ecosystem development, project progress, and community atmosphere. Of course, the overall trend of the market, whether it is bullish or bearish, also has a significant impact on prices. During a bear market, with weaker buying pressure, the negative impact of large unlocks can create significant selling pressure. However, once the market returns to a bull market, examples of tokens skyrocketing after unlocks are not uncommon. Investors need to analyze and judge comprehensively to seize market opportunities.