Altcoin Rally Cools as Massive $650M Worth of Token Unlocks Loom Over Crypto Market

• Crypto tokens DYDX, OP, SUI dropped sharply ahead of their large token unlocks, underperforming the broader Coindesk Market Index.
• Unlocks increase a digital asset's supply and allow early investors to sell tokens.

Several major alternative cryptocurrencies including native tokens of dYdX [DYDX], Optimism [OP] and Sui [SUI] dropped Monday as massive token unlocks weighed on prices amid a generally negative day on the broader crypto market.

Altcoins face almost $650 million worth of increase in their supply through this week, according to data from Token.Unlocks and CryptoRank.

DYDX will see roughly $480 million worth of tokens added to its circulating supply, almost doubling the current amount of tokens on the market. OP, SUI, Axelar [AXL], Immutable X [IMX] and 1inch [1INCH] and Hedera [HBAR] also have large unlocks scheduled in coming days.

Token unlockings translate to an increase in the asset's supply, releasing coins from a vesting period including to early investors. Large unlocking events usually lead to price declines due to the supply increase outpacing investor demand for the asset, a study by crypto analytics firm The Tie found earlier this year.

Axelar [AXL] dropped 10% in the past 24 hours as about $18 million worth of tokens – some 5% of its market capitalization – were added to its supply Monday during its scheduled monthly token unlock, including to early investors, according to CryptoRank data.

DYDX was down 7% during the same period ahead of the release of $480 million worth of tokens on Dec. 1.

OP declined nearly 6%, with an unlock of $40 million in tokens looming on Nov. 30.

SUI plunged 8.8% during the day as its supply will increase by $48 million over the course of the week.

1INCH fell over 4% with its supply set to increase by almost 10%, or $33 million, on Dec. 1. HBAR and IMX endured 2%-3% declines with each facing $11 million tokens being unlocked this week.

Meanwhile, bitcoin [BTC] was down 0.7% during the same period, while the broad-market crypto index CoinDesk Market Index [CMI] declined 1.5%.