Can the 80 million USD OTC save TIA as the massive unlocking gloom lingers?
Original Title: $TIA - an OTC story
Author: Taran, STIX
Compiled by: Ismay, BlockBeats
Editor’s Note: TIA will unlock approximately 176 million tokens today at 20:00, accounting for 80.13% of the current circulation, roughly equivalent to $900 million. According to Coinglass data, the total open interest in TIA contracts across the network is nearing a historical high. Celestia has attracted market attention during this crypto cycle due to its active OTC trading, especially with the upcoming massive unlock bringing new volatility opportunities to the market. This article delves into the key dynamics of OTC trading and changes in investor behavior from the early bull market to the current volatility surrounding TIA. With a large number of unlocks about to begin, supply shocks, discount pressures, and adjustments in funding rates may bring an unprecedented "unlock effect" to the $TIA market.
We use on-chain data from the @celenium_io API to analyze the potential impact of unlock dynamics on TIA's price movements in November. The results are shown in the table above, where we summarize that a total of 92.3 million TIA will enter the circulating market post-unlock, which will constitute the upper limit of overall spot selling pressure.
TIA has a 21-day unstaking period, and users who have unlocked and are ready to trade on October 31 have completed their unstaking. The total of 92.3 million TIA includes unstaked tokens, tokens in the 21-day unstaking queue, and approximately 24.1 million unrecorded tokens, equivalent to about $460 million in maximum selling pressure.
It is worth noting that this accounts for less than half of the total unlock volume, indicating that the selling pressure is half of what the market expected.
Another interesting data point is the actual increase in circulating supply relative to the current circulation, with a dilution rate of approximately 41.8%.
The first batch of unlocked tokens was largely sold to OTC buyers, who hedged through perpetual contracts, leading to a surge in open interest over the past few months. We expect many of these short positions to gradually close, partially offsetting the spot selling pressure, and this round of capital reset may signal a positive outlook for spot buyers.
Our analysis assumes that the 11 million TIA cliff unlock for OTC buyers is included in the unstaked pool (these tokens come from treasury wallets not marked on the blockchain explorer). We identified a total of 292 belonging wallets, some of which were not fully marked, thus including this discrepancy in the unstaked pool.
TIA OTC trading history on STIX:
Undoubtedly, Celestia is one of the most active assets in OTC trading during this cycle, primarily because it provided directional buyers eager to position themselves with an early long opportunity in the early stages of the cycle. Sellers actively sold due to unrealized large profits and a lack of expectations for the upcoming bull market (Q3 2023).
In Q1 2024, as the bull market matured, TIA rose above $20, but OTC trading activity was low at this time, as sellers were unwilling to accept discounts of over 40%, while buyers were also reluctant to bid above the $8.5 ceiling. We saw almost no trading activity, as sellers "felt" financially secure, preferring to maintain their risk exposure despite the opportunity for 100 to 800 times investment returns at that time.
The situation changed when TIA fell below $5, coinciding with the Celestia Foundation starting a $100 million OTC financing at a price of $3. The unlocking conditions for buyers were the same as for private investors—33% unlock on October 31, 2024 (less than two months from financing), followed by linear unlock over the next 12 months.
In Q3 and Q4 2024, OTC trading activity for TIA surged, with sellers offloading various positions, and we traded a large volume of both the first batch of unlocked tokens and the overall unlock.
According to data from STIX, since July, the total trading volume for TIA has been approximately $60 million, with the actual trading volume through various liquidity channels likely exceeding $80 million (assuming STIX holds a 75% market share in OTC).
Shorts will continue to close positions before the unlock, and funding rates may reset to 0 or positive values. Those who missed the October 9th unstaking deadline may also complete their unstaking in October, leading to an increase in spot supply (preparing to sell in November).
In any case, the supply shock is significant, and this is one of the most closely watched unlocks of this cycle. Coupled with depressed OTC discounts, this could bring a wealth of trading opportunities for the token.