What happened
Interestingly, the past week has been a relatively stable one in the world of cryptocurrencies. On an aggregate basis, the crypto sector has slightly gained ground over the past seven trading days (the crypto markets are open 24/7). However, certain tokens outperformed others, and there are some notable gainers and decliners worth noting.
Among the top three decliners over the past week investors may want to keep their eye on are ApeCoin (APE 4.76%), Arbitrum (ARB 1.87%), and Internet Computer (ICP 3.28%). These three tokens declined 15.9%, 12%, and 10.9%, respectively, over the past week, meaning there are key project-specific headwinds investors are pricing in with these specific projects.
So what
ApeCoin's decline over this past week appears to be tied to a token unlock scheduled for this Sunday, Sept. 17. At the beginning of next week, more than 40 million tokens will be unlocked and available for sale. Investors appear to be concerned about potential near-term selling pressure and are getting out ahead of this token unlock.
Of course, it's impossible to know how many tokens will ultimately be sold and what the impact on ApeCoin's price will be. Additionally, most early-stage crypto projects have vesting cliffs in which tokens are released over a period of time for insiders and early investors, who then are able to recoup some of their investment (via capital or sweat equity) at points in time. This will certainly be an intriguing project to keep an eye on moving forward.
Arbitrum's decline appears to be tied to outsized leverage from traders, with reports that $2.2 million in long liquidations have taken place over the past two weeks. As with most cryptocurrencies, leverage is used (to a greater degree than in other markets) by many traders to amplify their near-term returns. If bullish positions get unwound in short order, such dips can take place. Investors appear to have been increasingly bullish on this project due to a proposal earlier this month, which appears to not have provided the juice many had hoped for.
Finally, Internet Computer has seen bearish sentiment build over its token from some time as noted by a number of prominent experts in the crypto realm.https://www.investorsobserver.com/news/crypto-update/internet-computer-icp-receives-a-bearish-rating-thursday-is-it-time-to-get-on-board As most digital assets are difficult to value from a fundamentals perspective, sentiment can matter a great deal for these tokens. Investors are seeing the unfortunate reality of what a swing to a more bearish stance means in the near term.
Now what
As is the case with equities, a flat market isn't usually as it appears on the surface. There will always be winners and losers on a weekly basis, and these prominent crypto projects have the unfortunate distinction of making the top decliners list this week.
While the reasons for these declines vary, these short-term moves could indicate value for long-term investors bullish on the prospects of these projects. I'm on the sidelines when it comes to these three, but I do think staying apprised of market developments with these three projects is worthwhile.
