Celestia could face potential selling pressure by the end of October due to its major token unlock event, Illia Otychenko, Lead Analyst at CEX.IO, informed crypto.news.

On Oct. 30, 175 million Celestia tokens, accounting for 16.4% of its total supply, will enter the circulating supply as the modular blockchain celebrates its one-year anniversary. These coins are valued at roughly $1 billion at current price levels.

Key Factors Influencing Celestia’s Token Unlock Event

Otychenko highlighted three critical factors that could trigger bearish momentum for the TIA price during the upcoming token unlock event:

Early Unlock

The network launched just a year ago, marking its first major unlock since its inception. Additionally, the Oct. 30 release will commence subsequent monthly unlocks. Historically, tokens that have distributed less than 70% of their total supply tend to exhibit larger volatility during unlocking events.

Large Unlock

TIA is set to nearly double its circulating supply in a single event, increasing by 82%. This is significantly higher than the 1% threshold where negative price impacts typically begin to emerge.

Profit-Taking Opportunity

Approximately 67% of the tokens within the upcoming unlock will go to seed and Series A and B investors, who are currently sitting on 59,400% and 1,800% profits, respectively.

“With TIA underperforming in 2024, down by 70% from its all-time high of $20.9 in February, these early investors might be inclined to sell,” said Otychenko.

Otychenko’s analysis indicates that while activity on the Celestia network has significantly increased this year, its fees have declined. This reflects reduced revenue and short-term pressure on the TIA token. However, for the long term, “this dynamic can be a positive signal.”

Moreover, the analyst explains that TIA could face a short squeeze due to the massive token unlock event and potential profit-taking from early investors.

“If Celestia does not see a surge in positive activity after the token unlock, or if a broader altcoin rally does not materialize to support the asset, the TIA token could face a price decline exceeding 20% following the release,” Otychenko added.

On Sept. 23, the Celestia Foundation announced a $100 million funding round, led by Bain Capital Crypto. This announcement helped the TIA price surge 14% in less than 24 hours as positive sentiment surrounding the asset significantly increased.

TIA Price Update

As of Oct. 14, TIA is up by 3.4% in the past 24 hours, trading at $6.12. Its market cap is currently $1.33 billion, with a daily trading volume of $227 million.

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