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33 Million Token Unlock Triggers DYDX Price Drop – Could it Dip Below $3?

Last Updated April 1, 2024 8:26 AM
Valdrin Tahiri
Last Updated April 1, 2024 8:26 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • DYDX’s circulating supply increased by more than 11% due to a cliff unlock on April 1.
  • The DYDX price has trended downward since reaching a yearly high of $4.52 on March 7.
  • Will there be similar token unlocks in the near future, or will the token’s inflationary supply stabilize?

dYdX  is a decentralized perpetual futures trading exchange,  which uses zk-rollup technology with Ethereum as the parent blockchain. While it initially functioned as a hybrid decentralized exchange, it became fully decentralized after the release of dYdX v4.  Its native token is DYDX.

On April 1, more than 33 million tokens were released, increasing the circulating supply by more than 11%. Such inflationary pressures often result in a price decrease. Will this particular token unlock cause the DYDX price to fall below $3?

How Did the Unlock Affect Supply?

Before the recent unlock , the circulating supply for DYDX was 293 million . Therefore, the 33 million amounted to an increase of over 11% for the circulating supply, which has now jumped to 326 million.

From the unlock, 18.5 million DYDX went to investors, while 10.2 million went to founders and advisors”. Meanwhile, 4.6 million went to future employees. Although more DYDX tokens will be released before the end of 2026, this was the final cliff unlock.

DYDX Token Unlock
DYDX Unlock Schedule | Credit: Token.Unlock

A cliff unlock  refers to a lump sum release of tokens over a certain time period. A linear vesting schedule often follows a cliff unlock, as is the case for DYDX. In a linear vesting schedule, the release of new tokens will be done periodically at smaller amounts. For DYDX, new unlocks will not be larger than 2% of the total supply. The maximum supply of one billion will be reached on June 1, 2027.

dYdX announced new innovations in March, more specifically the introduction of LP vaults, which will help address liquidity problems for new markets. On that note, dYdX added 15 new markets  in March.

Compared to its main competitor GMX, a similar decentralized trading platform on Avalanche, dYdX has nearly twice the Total Value Locked  at $392 million.

DYDX Price Prediction: Will Price Fall Below $3?

The DYDX price has increased alongside an ascending parallel channel since the start of the year. Both the resistance (red icons) and the support (green icons) trend lines of the channel have been validated numerous times.

After an unsuccessful breakout attempt in the beginning of March, DYDX fell below the $3.60 horizontal area, which will likely provide resistance. The drop also confirmed that the attempted breakout was just a deviation (red circle).

DYDX Price Potential Drop
DYDX Weekly Chart | Credit: TradingView

Currently, DYDX risks breaking down below the channel’s midline, while the weekly MACD  has nearly made a bearish cross. A similar bearish cross (black circle) caused a drop to the channel’s support trend line in January 2024.

Presently, a similar movement would cause a 30% drop to the channel’s support trend line at $2.30.

On the other hand, a weekly close above the $3.60 resistance area will render this short-term bearish prediction invalid. Then, the DYDX price can increase to the channel’s resistance trend line.

DYDX Price Faces Difficult Road Ahead

On top of its inflationary pressures, the DYDX price failed to break out from its long-term channel pattern. This weakness in price can lead to a significant drop toward its support trend line. The DYDX trend is likely bearish until the price breaks out from this channel.

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