Over the next few hours, ~$550m worth of OP will be unlocked, all of which will be distributed to early investors and team contributors. This represents 115% of the circulating supply hitting the market. Here’s what you need to know:
The unlock consists of 386m OP tokens distributed to investors and contributors in a one-time cliff unlock. This accounts for 9% of the total supply and a 115% increase in the current circulating supply.
After this, a linear vesting will start, distributing 0.5% of the total supply, or roughly 20m tokens, on a monthly basis. For context, from June ’23 to January ’24, the supply will increase by 25%, representing a potential sustained sell pressure going forward.
Given the current market situation with dried volumes and overall liquidity, it is likely that investors, who are on average up 600% on their investments, will realize some of their profits. They have invested a total of $178.5m with an average cost of $0.24 per token.
Looking at on-chain flows, we have noticed significant activity from Wintermute and large transfers. Over the past 48 hours, Wintermute deposited $5.2m worth of OP (3.38m tokens) to exchanges like Binance and OKX. They still have 15m tokens in their balance, worth ~$22m.
Even though OP is down 11% since their first deposit, these large deposits may not necessarily represent a selling pressure, as Wintermute is also OP largest market liquidity provider.
Another notable important on-chain flow is the multisig address 0xa2, which has received $30.5m worth of OP (21m tokens) over the past 8 days. 60% of this volume came over the last 16 hours, likely in preparation for the upcoming unlock.
As for market dynamics, the Aggregated Open Interest on Stablecoin-margined Contracts of OP on Binance is at a high of 74m, mainly from short positioning. This level of Open Interest is the highest since October 2022.
It is important to remember that short positions are not necessarily all from insiders hedging their positions. They also come from other market participants shorting in expectation of insiders selling, which in fact is the main driver behind prices potentially decreasing.
However, if insiders refrain from selling in the short term, combined with the potential positive impact of the upcoming Bedrock Upgrade scheduled for June 6th, these participants may as well find themselves caught on the wrong side of the market.
In conclusion, the OP unlock will undoubtedly shake the market, bringing with it opportunities and the unpredictability of crypto. Hence, it is essential for investors to closely monitor on-chain flows to assess any potential sell pressure from newly distributed tokens.