Kaito [KAITO] has been declining over the past few days. The asset has lost roughly 57% of its accumulated gains over the past week, a trend it has continued over the past day as it lost another 11% as of writing.
Notably, this downward performance, which has lasted more than a week, has been whale-driven.
The whale retail delta remained around 0.242 on the chart, as whales possibly consider the asset overvalued and are selling it until it finds fair value.
Token unlock could have incentivized selling
A token unlock, a periodic event where more of an asset’s supply is released to the market to facilitate certain activities, including development and community benefits, is set to happen for Kaito.
The next token unlock is scheduled for the 20th of August, with 32.6 million KAITO tokens set to be released to the market, representing 3.26% of the token’s total supply.
Usually, when demand remains limited following an asset’s token unlock, its price tends to decline notably. A similar scenario could be the case for KAITO, especially as sentiment across the crypto market remains broadly bearish.
The assumption is that investors are selling their KAITO holdings ahead of the unlock to avoid absorbing larger losses after the unlock. The token holders chart has remained largely flat over the past week, implying that few new holders have entered the market to purchase KAITO.
Likewise, this confirms that whales are not completely selling their KAITO holdings but are instead selling a portion of their wallets, possibly to maintain exposure to the asset.
There’s a warning for KAITO bulls
Perpetual market data shows a clear warning for traders who remain bullish despite the overwhelming bearish dominance in the market: trade with caution.
This is based on liquidation data, which points to a growing disparity between short and long positions. At the time of writing, the gap between the losses of these two groups of traders had widened to a 21-fold difference.
Long positions recorded total liquidations of roughly $767,190, while short positions saw losses of $35,340. A gap of this size suggests that optimistic traders may need to exercise caution before betting long on the asset.
For now, traders should treat the market with caution if they expect to take long positions.
Final Summary
- Kaito has lost another 11% in the past day as whale selling continues to weigh on the asset.
- The upcoming 32.6M KAITO token unlock could add further selling pressure as market sentiment remains bearish.