With the huge amount of unlocking coming, will the TIA market undergo a huge change?

Original author: Taran (founder of OTC trading platform STIX)

Compiled by Odaily Planet Daily ( @OdailyChina )

Translated by Azuma ( @azuma_eth )  

Editors note: Celestia will unlock 175.59 million TIA at 22:00 Beijing time tonight, worth approximately $900 million, accounting for 79.91% of the current circulating supply. This is one of the largest and most watched unlocking events in this cycle. Regarding the market structure of TIA after unlocking, Taran, the founder of the OTC trading platform STIX, combined the on-chain data, futures data and STIX platform data to give his own professional analysis. Taran believes that the actual spot selling pressure is not as high as the market imagines; and because the funds for early short-selling hedging need to be closed, it may further offset the spot selling pressure; in addition, most of the chips have been changed hands in the OTC market, further amplifying the complexity of TIAs subsequent momentum.

The following is Taran’s original text, translated by Odaily Planet Daily.

This chart outlines the new circulation of Celestia (TIA) on October 31, 2024, and I will explain this data below.

We used on-chain data (data from Celenium) to accurately calculate the changes in TIA circulation after entering November. The final conclusion is that after unlocking, it is expected that 92.3 million TIA will enter circulation, which is the upper limit of the new spot selling pressure.

It takes 21 days for staked TIA to be unstaked, and those who wanted to trade TIA immediately on the unlocking date of October 31 have already unstaked it. Currently, the total amount of all unstaked tokens (including 24.1 million tokens belonging to insiders whose status cannot be determined) and tokens in the unstaked queue is about 92.3 million TIA.

This equates to a maximum selling pressure of about $460 million, or roughly 50% of the total unlocked, meaning the actual selling pressure may be only half of what people expect.  

If the actual new circulating supply is compared to the current circulating supply, this means a 41.8% circulation dilution.  

A large number of unlocked chips have been traded through the OTC market, and buyers will choose to hedge in the futures market, which has caused TIAs funding rate to soar in the past few months. We expect that after the unlocking, short positions in the futures market will shrink and partially offset the spot selling pressure. This funding allocation pattern may become a bullish signal for spot buyers.

Our analysis assumes that 11 million TIAs that will be unlocked tonight (not including the subsequent linear unlocks) have already changed hands through the OTC market , and we put them in the unstaked tokens category (these tokens are from the treasury addresses and are not marked in the browser). In total, we drew 292 unlocked addresses, and some were not fully drawn, and these differences were also counted in the unstaked tokens category.

STIX has witnessed changes in OTC trading of TIAs during this cycle.  

There is no doubt that TIA is one of the most OTC-traded assets in this cycle. The main reason is that TIA provides an early long opportunity for buyers eager to make directional layouts in the early stage of this cycle; sellers also have their own motivations, one is to pocket huge unrealized profits and losses (PNL), and the other is because they failed to anticipate the upcoming bull market (Q3 2023).

By the first quarter of 2024, the bull trend has been consolidated and TIA has risen to more than $20. At this time, OTC activities are rare, on the one hand, sellers are unwilling to accept a larger discount (40% +), on the other hand, buyers do not want to bid too high (more than $8.5). At this time, we can hardly see OTC trading activities, because sellers generally feel that they have made a lot of money and want to continue to maintain risk appetite, even though they have the opportunity to cash in their investment for 100-800 times the return.

The situation changed when TIA fell below $5, which is when the Celestia Foundation began to raise a $100 million OTC round at $3. The lockup conditions for buyers were the same as for private investors, with 33% unlocking on October 31, 2024 (less than 2 months into the round), and then linearly unlocking over the next 12 months.

In the third and fourth quarters of 2024, TIA OTC trading was very active, with sellers actively selling various shares, including the first unlocked shares and all subsequent shares. On STIX, TIA OTC trading volume since July was about $60 million. Assuming STIX has a 75% OTC market share, this may indicate that the turnover of TIA completed through various OTC liquidity channels is more than $80 million.

TLDR

All in all, short positions in the futures market will be closed before the unlock date, which means that the funding rate may reset to 0 or positive. People who missed the October 9 unstaking deadline may unstake later in October, which will lead to further growth in the circulating supply in November. In any case, the scale of the new supply is huge, this is one of the most well-known unlocking events in this cycle, and coupled with the impact of OTC trading, it may make the subsequent trend of TIA more confusing.