Anticipated Increase in Circulating SAND Supply Brings Concerns to Investors

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Anticipated Increase in Circulating SAND Supply Brings Concerns to Investors

Investors in the web3 game The Sandbox are preparing for a significant token unlock event on August 14, causing the native token, SAND, to decline by 20% over the past four weeks. Approximately $136 million worth of SAND tokens will enter the market, which is equivalent to 16.6% of the current market capitalization. Tokenholders are reducing their exposure to SAND ahead of this event, as a portion of the tokens will also be allocated to early investors, consultants, The Sandbox's team, and foundation. In the past, similar unlock events had caused a significant decrease in SAND's price. Token unlocks are crucial for cryptocurrency investors to monitor as they determine when a substantial amount of tokens will enter circulation. The distribution of veteran cryptocurrencies like ETH and BTC among various holders has been facilitated by early accessibility to Proof of Work mining and market cycles. However, newer or VC-backed cryptocurrencies often have a small group of investors and team members who hold a large portion of the token supply, usually distributed over time to attract liquidity. The metaverse sector experienced significant hype during the 2021 bull market but suffered substantial losses during the bear trend. Despite a rebound in market capitalization, it has since retraced.