How Grayscale’s 2025 Unlocks Could Shake The Market
On Thursday, one of the leading cryptocurrency markets, Solana (SOL), emerged as the broader cryptocurrency market showed signs of recovery. AltcoinsIt surged to the $200 mark, up 8% in the past 24 hours.
The upward momentum brings the sixth-largest cryptocurrency by market capitalization closer to its all-time high set in November 2024. However, market experts warn Solana could come under intense pressure in the coming days.
A double-edged sword for Solana investors
Ben Lilly, a market analyst at Jarvis Labs, recently highlighted the potential risks associated with the “grayscale effect.” in a social media postsHe warned that the imminent unlocking of the Grayscale SOL token could create significant selling pressure on altcoins.
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Grayscale is a well-known digital asset management company that implements a 12-month asset protection policy after an acquisition. As two major unlocking periods approach (January 24 to February 2 and July 24 to August 7), Eli Lilly is warning investors to remain vigilant.
The mechanism of Grayscale Trust is similar to that of Grayscale Bitcoin Trust (GBTC) in the past. In this case, investors will buy Bitcoin (BTC) via Grayscale, which will hold the asset for a period of time before issuing shares.
This creates a premium, with the stock trading at a higher price than Bitcoin’s actual price, causing the market to rise significantly.
However, when that premium disappeared, it marked the market’s peak in 2021, leading to a string of failures for the likes of Three Arrows Capital, BlockFi, Celsius, and Voyager.
SOL prices may fall
Lilly noted that Grayscale is currently executing a similar strategy to Solana and that upcoming unlocks may reflect past situations. volatility Seen in the crypto market.
The analyst pointed out that previous private placements that purchased large amounts of SOL tokens were unlocked starting in late July 2024, during which the price fell 40% in just ten days.
There are concerns that the January 2025 unlock could see the same trend unfold, which could lead to a sharp sell-off. Analysts believe that when investors who have benefited from premiums in the past sell their holdings, they may flood into the market, putting downward pressure on the stock market. SOL price.
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Eli Lilly recommends that Solana holders consider selling before the January 24 unlock date, as this could mark a key turning point for the asset.
Although Solana’s Grayscale Trust is relatively small compared to SOL’s overall market capitalization, the potential impact on price cannot be ignored.
According to analysis by Eli Lilly and Company, historical trends show that even small unlockings can have a significant impact market behavior. He assured that while the coming selling pressure might not result in catastrophic losses, it could lead to local tops and lower premiums.
As of this writing, SOL is trading at $205, down just over 20% from its peak of $263 on November 24 last year.
Featured images from DALL-E, charts from TradingView.com
