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In a recent analysis shared on X, Taran Sabharwal, the CEO of Stix—a prominent OTC trading platform known for its expertise in liquidity solutions for private crypto transactions—offered an in-depth look at the upcoming unlock dynamics of the Celestia (TIA) token, scheduled for October 31, 2024. His insights suggest that the market might be underestimating the potential impact on TIA’s price action as we move into November.
Why Celestia (TIA) Could Be a Strategic Investment
“TIA – an OTC story,” began Sabharwal. Using on-chain data via the Celenium API, he assessed how the unlock dynamics could potentially shape TIA’s price action as we enter November. The results, detailed in the accompanying table, indicate that a total of 92.3 million TIA tokens will become liquid post-unlock. This figure represents the upper bound of possible spot selling pressure.
Notably, this amount accounts for less than 50% of the total cliff unlocks, implying that the actual sell pressure might only be half of what the market had anticipated. Sabharwal highlighted that the real increase in circulating supply, compared to the current supply, indicates a 41.8% dilution.
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A key element in this scenario is the activity of OTC buyers who acquired significant portions of the initial unlock and hedged on perpetual futures, causing open interest to surge in recent months. “We anticipate that many of these shorts will continue to unwind, partially counteracting the spot-selling pressure,” he explained. This unwinding could signal a bullish trend for spot buyers due to the potential reset in funding rates.
Sabharwal’s analysis was based on several critical assumptions. OTC round buyers possess an 11 million TIA cliff unlock, included in the non-staked token category, as these tokens originated from treasury wallets not tagged on the blockchain explorer. His team mapped out a total of 292 vesting wallets but acknowledged some gaps, which were also included in the non-staked category.
Reflecting on TIA’s OTC history on Stix, Sabharwal noted that Celestia has been one of the most actively traded assets in the OTC market during this cycle. Early in the cycle, it presented an attractive opportunity for directional buyers, while sellers were eager to realize large unrealized profits without anticipating an imminent bull market in Q3 2023.
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The dynamics shifted when TIA fell below $5, coinciding with the Celestia Foundation’s commencement of its OTC round, raising $100 million at $3. “The vesting for buyers was identical to that of private investors—33% unlock on October 31, 2024, and a 12-month linear unlock,” Sabharwal noted.
During the third and fourth quarters of 2024, aggressive OTC trading activity resumed, with sellers offloading various positions. Stix alone facilitated approximately $60 million in TIA volume since July, suggesting that total trading volume could exceed $80 million across all liquidity channels, assuming Stix holds a 75% market share in the OTC space.
Summing up his analysis, Sabharwal concluded: “TLDR: Shorts will continue unwinding into the unlock, and funding rates may reset to 0 or positive. Those who missed the October 9 unstaking deadline may have also unstaked during October, leading to further spot supply ready to be sold as we enter November. Either way, the supply shock is significant, and it’s been the most publicized unlock of this cycle. This, combined with suppressing OTC discounts, could spark substantial activity for the coin.”
Renowned crypto analyst Will Clemente also commented on the developments via X, stating: “Great piece on $TIA OTC activity by Taran from Stix. TLDR: The OTC discount to spot in the private market has compressed over the last year, indicating growing demand as the unlock approaches. Stix alone has facilitated $60 million in TIA OTC volume since July.”
Clemente added his perspective on the potential market impact: “I think this BTC price action has further reduced the likelihood of Thursday’s TIA unlock being bearish. With six months of reaccumulation after an 80% drawdown, a significant amount of OTC volume, and the most widely telegraphed unlock in crypto history, I remain optimistic.”
At the time of writing, TIA is trading at $5.00.
