The shadow of huge unlocking remains, can $80 million OTC save TIA?

Original title: $TIA - an OTC story

Original author: Taran, STIX

Original translation: Ismay, BlockBeats

Editor's note: TIA will unlock about 176 million tokens at 20:00 today, accounting for 80.13% of the current circulation, equivalent to about US$900 million. According to Coinglass data, the total TIA contract holdings are close to a record high. Celestia has attracted market attention with its active OTC trading in this round of crypto cycle, especially its upcoming massive unlocking has brought new volatility opportunities to the market. This article explores in depth the key dynamics of OTC trading and changes in investor behavior during TIA's early bull market to today's violent fluctuations. With a large number of unlocks about to start, supply shocks, discount reductions, and adjustments to funding rates may bring an unprecedented "unlocking effect" to the $TIA market.

We used on-chain data from the @celenium_io API to analyze the impact that unlocking dynamics may have on TIA’s price action in November. The results are shown in the table above, and we conclude that a total of 92.3 million TIA will enter the circulation market after unlocking, which will constitute the upper limit of the overall spot selling pressure.

TIA has a 21-day unstaking cycle, and users who have unlocked and are ready to trade on October 31 have completed the unstaking. Unstaked tokens, tokens in the 21-day unstaking queue, and approximately 24.1 million unrecorded tokens total 92.3 million TIA, which is equivalent to a maximum selling pressure of approximately $460 million.

It is worth noting that this accounts for less than half of the total unlocked, meaning that the selling pressure is less than half of what the market expects.

Another interesting data point is the actual increase in circulating supply compared to the current circulating supply, which is about a 41.8% dilution rate.

The first unlocked tokens were sold in large quantities to OTC buyers who hedged via perpetual contracts, causing a surge in open interest over the past few months. We expect many of these short positions to be closed out over time, partially offsetting spot selling pressure, and this round of funding reset may be a positive signal for spot buyers.

Our analysis assumes that the 11 million TIA cliff unlocks from OTC buyers are included in the non-staking pool (these tokens are from treasury wallets that are not marked on blockchain explorers). We identified a total of 292 attributable wallets, some of which were not fully marked, so this difference is included in the non-staking pool.

TIA OTC Trading History on STIX:

Without a doubt, Celestia was one of the most active OTC assets in this cycle, primarily due to its early long opportunity for directional buyers eager to position early in the cycle. Sellers were actively selling due to large unrealized profits and lack of expectations for the upcoming bull run (Q3 2023).

In Q1 2024, the bull run matured and TIA rose to over $20, but OTC activity was low at this time as sellers were unwilling to accept a 40%+ discount and buyers were unwilling to bid above the $8.5 ceiling. We saw almost no trading activity, sellers "felt" they were financially strong and preferred to maintain exposure despite the opportunity to achieve a 100x to 800x return on investment at the time.

The tide turned when TIA fell below $5, coinciding with the Celestia Foundation’s $100 million OTC funding round at $3. The unlocking conditions for buyers were the same as for private placement investors – 33% unlocked on October 31, 2024 (less than two months after the funding round), followed by linear unlocking over the next 12 months.

In Q3 and Q4 2024, TIA OTC trading activity surged as sellers sold off various positions, and we traded a large number of tokens from the first unlock as well as the overall unlock.

According to STIX data, total TIA trading volume has been around $60 million since July, and it is speculated that the actual trading volume through various liquidity channels may exceed $80 million (assuming STIX has a 75% market share of the OTC market).

Shorts will continue to close positions before unlocking, and the funding rate may reset to 0 or positive. Those who missed the October 9th unstaking deadline may also complete unstaking in October, resulting in an increase in spot supply (ready to sell in November).

In any case, the supply shock is very large, and this is one of the most watched unlocks in this cycle, coupled with the depressed OTC discount, which may bring a lot of trading opportunities for the token.

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