Will VELO Price Decline As A 3 Billion Token Unlock Approaches?

VELO's price has seen a significant drop of over 13% in the past week, with a major token unlock event on the horizon. As investors brace for the release of 3 billion VELO tokens, concerns mount regarding the possible impact on the token's value.

Key Takeaways

VELO's price has fallen by 13.4% over the last week, trading at approximately $0.013.
A total of 3 billion VELO tokens, valued at about $39.67 million, will unlock on September 20, 12:00 AM UTC.
900 million of these tokens will go to the founders, while 2.1 billion will bolster the development reserve.
Increased supply from the unlock event has the potential to lead to downward price pressure unless demand increases significantly.
The rollout of stablecoins pegged to several Southeast Asian currencies could generate renewed investor interest in VELO.

Will VELO price crash as a 3 billion token unlock looms?

Current Market Situation

Currently, VELO is trading at $0.013, reflecting a decline of 13.4% in the past week and a staggering 64% loss compared to its peak for the year. As per reports from Token Unlocks, a substantial release of 3 billion VELO tokens, estimated at around $39.67 million, is set to occur at 12:00 AM UTC on September 20. This release represents about 17% of the circulating supply and roughly 12.5% of VELO's total supply.

Out of the tokens being unlocked, 900 million, worth around $11.9 million, will be distributed to the project's founders, while the remaining 2.1 billion tokens will be added to the Velo development reserve.

Concerns Over Market Reactions

Historically, large-scale token unlocks lead to selling pressure, as investors often speculate about a potential sell-off in the open market. Moreover, if the project does not foster sufficient demand to absorb the increased supply, it could exacerbate selling concerns.

The recent price drop in VELO signals apprehension among traders ahead of the token unlock event, which may result in a deeper correction. This early selling pressure could weaken the token's value even before the unlock occurs.

Potential for Recovery

However, VELO could alleviate some of this selling pressure if it successfully cultivates demand through noteworthy developments. Recently, the Velo team hinted at launching stablecoins pegged to various Southeast Asian currencies, such as the Thai Baht (THB), Vietnamese Dong (VND), Philippine Peso (PHP), and Indonesian Rupiah (IDR).

If they go ahead with this rollout, it could spark renewed interest from investors and users, helping to absorb the surplus supply from the upcoming token unlock, which may ultimately counterbalance the selling pressure.

Technical Analysis

On the daily chart, VELO has been moving within a declining parallel channel for nearly two weeks. The token's price has dropped below all significant moving averages, suggesting that sellers currently have the upper hand in shaping price movements.

Momentum indicators like the MACD and Relative Strength Index (RSI) are also showing downward trends, with the RSI remaining far from oversold levels. This information underlines a persistently bearish outlook in the short term.

Given these technical indicators, the most plausible target price for VELO appears to be around $0.0119, a level that has previously served as robust support. Should this level fail, a further decline to the psychological support level of $0.010 could occur.

However, a bullish breakout above the upper boundary of the descending channel would negate this bearish scenario.

Disclaimer

This article does not constitute investment advice. The information and materials presented are for educational purposes only.