Locked token holders have experienced significant drawdowns in their positions compared to over-the-counter valuations in May 2024. Data from STIX founder Taran Sabharwal shows that holders could have exited at double the current spot prices the previous year. Major tokens such as JITO, BERA, and ZRO have seen considerable declines in their fully diluted valuations, with some projects experiencing an 85% to 88% drop in value.
Among the projects tracked, only JITO showed an increase in valuation, highlighting the risks associated with investing in illiquid, locked positions during early-stage token rounds. While these investments are typically structured with the expectation of long-term upside, market volatility and project-specific factors have led to underperformance relative to initial valuations. This has resulted in missed exit opportunities for early investors in the secondary market throughout 2024.
The disparity between OTC valuations and spot prices underscores the challenges faced by locked token holders during market fluctuations. With vesting schedules and transfer restrictions in place, holders are unable to access liquidity and are exposed to shifts in the market. This underperformance compared to the broader crypto market, which experienced an average correction of 40.7%, suggests that newer projects may face additional pressure in secondary markets.
The data shared by Sabharwal raises questions about the implications for token markets and early investors. It suggests that locked token holders may have missed out on better exit opportunities in the secondary market, leading to significant losses in their investments. As the crypto sector continues to evolve, it is important for investors to carefully consider the risks associated with locked positions and the potential impact of market volatility on their investments.
Overall, the data highlights the importance of carefully evaluating the risks and rewards associated with investing in locked token positions. While these investments may offer long-term upside potential, they also come with inherent risks and challenges, particularly during periods of market volatility. Investors should consider diversifying their portfolios and staying informed about market trends to make informed investment decisions.
