VELO Price Analysis: Will the Token Unlock Event Cause Further Losses?
VELO price has experienced a significant drop of over 13% in the past 7 days, raising concerns among investors and traders. The upcoming major token unlock event scheduled for late September has added to the uncertainty surrounding the cryptocurrency. With 3 billion VELO tokens set to be released into circulation this month, valued at approximately $39.67 million, market participants are closely monitoring the situation to gauge the potential impact on the price.
The unlocked tokens will represent around 17% of the circulating supply and 12.5% of VELO’s total supply. Out of the total unlocked tokens, 900 million will be allocated to founders, while the remaining 2.1 billion tokens will be released to the Velo development reserve. Such large-scale token unlocks often lead to selling pressure as investors anticipate a potential sell-off in the open market. If the demand fails to absorb the additional supply following the unlock event, concerns about a price correction may escalate.
The recent decline in VELO’s price could be attributed to these concerns, as traders preemptively sell off their holdings in anticipation of the unlock event. However, Velo has hinted at potential developments that could mitigate this selling pressure. The protocol plans to launch stablecoins pegged to multiple Southeast Asian currencies, including Thai Baht, Vietnamese Dong, Philippine Peso, and Indonesian Rupiah. This initiative could attract renewed interest from investors and users, potentially offsetting the selling pressure caused by the token unlock.
From a technical analysis perspective, VELO has been trading within a descending parallel channel for the past two weeks, with the price dipping below major moving averages. Momentum indicators such as the MACD and RSI are pointing downwards, indicating a bearish short-term outlook. The price may continue to trend lower within the channel, with a possible target at $0.0119, a strong support level from earlier this year. A breach of this support could lead to a further decline towards $0.010, a psychological support level.
However, a bullish breakout above the upper boundary of the channel could invalidate this bearish scenario. Investors and traders are advised to closely monitor the price action and developments surrounding VELO in the coming days. It is essential to exercise caution and conduct thorough research before making any investment decisions. This article serves as educational content and does not constitute investment advice.