ApeCoin's Token Unlock Sparks Concerns Amidst Market Volatility

ApeCoin's (APE) price has dipped ahead of an upcoming token unlock, expected to release 25 million tokens, potentially increasing selling pressure. The unlock is part of a planned distribution, with a final supply target of 1 billion APE. Despite previous declines, analysts suggest that upcoming staking features may provide support for the token's value.

ApeCoin's Upcoming Token Unlock Raises Concerns Amidst Market Volatility

ApeCoin (APE), the native token of the ApeCoin decentralized autonomous organization (DAO), experienced a decline in value on Friday, driven by an impending token unlock scheduled for the weekend. This unlock will release over 25 million tokens, representing 8% of APE's current circulating supply, and is expected to exert additional selling pressure on the asset.

The ApeCoin DAO, a community-driven initiative, was established with the mission of steering the growth and development of the Bored Ape ecosystem. APE tokens were first introduced in March, distributed through an airdrop to holders of the Bored Ape NFT lineup.

The impending token unlock is part of a planned series of releases aimed at increasing APE's total supply to 1 billion tokens, up from the current 314 million. Of this total supply, 62% is allocated to the ecosystem fund, while 16% belongs to ApeCoin issuer Yuga Labs. The remaining shares are distributed among Bored Ape Yacht Club (BAYC) founders (8%) and independent launch contributors (14%).

Unlocks for Yuga and BAYC founders are scheduled for next March, while the weekend's release pertains to the token supply earmarked for contributors. The identities of these contributors remain undisclosed, but crypto research firm Delphi Digital suggests that it may include prominent investors such as a16z, Animoca Brands, and FTX, who have been involved in funding rounds for Yuga Labs and the development of ApeCoin DAO.

Delphi analysts emphasize the uncertainty surrounding the potential selling decisions of these launch contributors once the tokens are released. Such actions could lead to significant downward pressure on APE's price.

At the time of writing, APE was trading at $4.80 during Asian morning hours, marking a 6.5% decline over the past 24 hours. This slide occurred despite the relative stability observed in other major cryptocurrencies. In the past month alone, APE has shed 21% of its value, while bitcoin and ether have largely remained within a defined range.

Despite the impending unlock, some analysts maintain an optimistic outlook for ApeCoin. They highlight the upcoming introduction of ApeCoin staking, which would allow holders to utilize their Bored Ape NFTs as collateral for borrowing cryptocurrencies. This feature is anticipated to boost demand for APE and stimulate accumulation.

Chris Esparza, founder of Vault Finance, believes that staking will vitalize interest in the token and generate value for the Bored Ape ecosystem. Horizen Labs, the company entrusted by the ApeCoin DAO with the development of the staking product, confirmed in July that the feature's release is slated for this fall.