Celestia (TIA) is generating buzz in the crypto community as analysts warn of a potential supply shock following a significant token unlock scheduled for October 31, 2024. Insights from Taran Sabharwal, CEO of Stix—an over-the-counter (OTC) trading platform—suggest that the market may be underestimating the impact of this event on TIA’s price trajectory heading into November.

Understanding the Unlock Dynamics

In a recent analysis shared on X, Sabharwal delved into the upcoming unlock dynamics of TIA, stating that “TIA – an OTC story.” Using on-chain data from @celenium_io, he detailed that a total of 92.3 million TIA tokens will be available post-unlock. This number represents less than 50% of the total tokens set to unlock, which implies that the actual selling pressure may be lower than what many market participants have anticipated.

Sabharwal pointed out that the expected increase in circulating supply indicates a 41.8% dilution compared to the current supply. This dilution could significantly affect market perceptions and pricing.

Factors Contributing to Market Optimism

A crucial aspect of this unfolding situation is the activity of OTC buyers. These buyers have accumulated large amounts of TIA during the initial unlock phases and have hedged their positions on perpetual futures contracts. Sabharwal noted that this surge in open interest over the past months could mitigate some of the anticipated selling pressure as many of these shorts unwind.

He highlighted that some OTC buyers hold an 11 million TIA cliff unlock, which falls into the non-staked token category. This group has been active in the market, and their behavior could influence TIA’s price movements significantly. The combination of aggressive buying and hedging strategies could lead to a bullish sentiment among spot buyers, especially as funding rates potentially reset.

The Evolution of TIA in the OTC Market

Sabharwal’s analysis reflects on TIA’s performance in the OTC market, noting that it has been one of the most actively traded assets in recent months. During earlier phases of the cycle, TIA presented a lucrative opportunity for buyers, while sellers were keen on realizing significant profits without anticipating an immediate bull market.

As TIA reached over $20 in early 2024, trading activity dwindled. Sellers were reluctant to accept larger discounts, and buyers hesitated to bid above $8.5. However, as TIA fell below the $5 mark and the Celestia Foundation raised a $100 million OTC round at $3, market dynamics shifted.

The Impending Unlock and Market Expectations

The unlock event on October 31 will be significant, as it aligns with the vesting periods for private investors and early backers. Sabharwal noted that 33% of tokens will unlock on this date, followed by a 12-month linear unlock. The aggressive trading activity observed in recent months indicates that sellers have been offloading various positions, leading to a total trading volume of approximately $60 million in TIA since July, with expectations that it could surpass $80 million across all channels.

A Cautious but Optimistic Outlook

Summarizing his findings, Sabharwal concluded that the unwinding of shorts into the unlock could lead to a positive shift in funding rates, potentially turning them positive or neutral. The market may also see additional supply entering the market as those who missed previous staking deadlines sell their tokens.

Notably, renowned crypto analyst Will Clemente also weighed in on the developments, emphasizing that the demand for TIA in the OTC market has grown. He believes the upcoming unlock, widely anticipated by the community, could be bullish, citing the substantial trading volume and the period of reaccumulation following an 80% drawdown.

Conclusion

As Celestia prepares for its significant unlock event, the market is abuzz with speculation about the potential price movements. With a blend of bullish on-chain metrics, aggressive OTC trading activity, and a favorable sentiment among analysts, TIA may be positioned for a breakout. Whether this unlock leads to a supply shock or a price surge remains to be seen, but one thing is clear: Celestia is a token to watch in the coming days.