Locked token investors have faced significant financial hardships over the past 12 months, with average losses hovering around 50% compared to last year’s over-the-counter (OTC) token values.
Specifically, this indicates that a token initially valued at $1 in a locked OTC deal now trades for only $0.50 on the open market. This price reduction has far-reaching and intricate effects.
The true extent of these losses becomes evident when compared to Bitcoin’s performance during the same period. While locked tokens fell sharply, Bitcoin, the leading cryptocurrency, surged by 45%. In practical terms, an investor holding Bitcoin would see their investment grow to approximately $1.45 today.
In contrast, locked token holders may need to sell at a 50% discount to exit their OTC positions, reducing the practical value of their tokens from $0.50 to $0.25, highlighting the severe financial impact.
Locked Token Losses Compared to Bitcoin and USD
In essence, a locked token initially valued at $1 has experienced an effective loss of approximately 82.8% of its worth when measured against Bitcoin’s performance, and around 75% compared to its original USD value.
This severe depreciation stems from both declining market prices and the erosion of opportunity cost.
Over the past year, investors theoretically could have transitioned their assets into more liquid and potentially lucrative investments. Unfortunately, many could not capitalize on this opportunity because their tokens were locked, and now the window for alternatives has closed.
Upcoming Altcoin Unlocks
Investors face additional challenges with over $40 billion in altcoin unlocks expected to flood the market soon. Many holders are preemptively rushing to sell before these events unfold, but OTC buyers are demanding steep discounts to mitigate the heightened risks associated with these transactions.
Although vesting schedules are gradually becoming shorter, with most cliff unlocks expected to conclude by 2025, the damage inflicted on early holders is profound and likely irreversible.
Consequently, locked token holders find themselves grappling with a toxic mix of poor liquidity, drastic price declines, and lost opportunities. The result is a painful outcome for those who were unable to act swiftly to safeguard their investments.
