Sonic price at risk amid token unlocks and stablecoin, DeFi crash

Sonic price has crashed in the past few months, erasing millions of dollars in value, and the trend may continue this week as token unlock, stablecoin, and decentralized finance (DeFi) risks remain. S token price has crashed to $0.3233, down by 67% from its highest point this year.

Sonic token unlocks ahead

Andre Cronje’s Sonic token will be in the spotlight this week as it unlocks millions of tokens. DeFi Llama data shows that the network will unlock tokens worth $76 million, representing about 7.45% of the float on Friday. 

Sonic has a circulating supply of 2.88 billion tokens against a total supply of 3.17 billion. This means that holders can expect more unlocks in the coming years, with the next scheduled one happening on July 5 next year.

A token unlock is often seen as a bearish thing for a token because it increases the circulating supply. Higher supply and low demand often leads to more token downside. 

Additionally, more token supply often impacts the staking yield since many investors move their coins to staking pools. 

The token unlock will happen a week after Sonic Labs opened the entire S airdrop to US residents.

Read more: Sonic SVM introduces Attention Capital Market to monetize digital attention

DeFi and stablecoin volumes are falling

Sonic price is at risk as its decentralized finance network deteriorates. Data shows that the total value locked (TVL) in this network has been in a strong downtrend in the past few months, signaling that the momentum it had earlier this year has faded. 

Sonic has a total value locked (TVL) of $1.14 billion, down from $1.9 billion earlier this year. Most dApps in its ecosystem like Aave, Beets, Silo Finance, Pendle, and Stablity have shed substantial assets in the last 30 days.

This is a big reversal from what happened a few months ago when Sonic was one of the fastest-growing chains, with its TVL jumping from $74 million in January to over $1.14 billion.

More data reveals that the volume of stablecoins handled in the Sonic blockchain has crashed this month. After soaring to $4.21 billion in May, the amount dropped to $2.05 billion this month. 

Shadow Exchange handled over $1.17 billion in the last 30 days, while SwapX, Beets, and XPress Protocol handled $246m, $150m, and $149m.

Another top data shows that Sonic’s stablecoin ecosystem remains under pressure. Per Artemis, the number of Sonic’s stablecoin addresses has crashed by 100% in the last 30 days to over 41,000. 

Similarly, the stablecoin supply in the network has plunged by 27% to $328 million, while the number of transactions fell by 100% in the last 30 days to 9.2 million, 

Sonic’s adjusted stablecoin transactions also plunged to $19.6 billion. This is a major red flag because stablecoins have become the fastest-growing sectors in the crypto industry. 

Read more: Sonic partners with Kaito to reward active X engagement around $S brand

Sonic price technical analysis

S price chart | Source: TradingView

The 12-hour chart shows that the Sonic crypto price has crashed from the year-to-date high of $0.9833 in February to $0.3233. It has crashed below the key support at $0.3810, its lowest swing in April.

Sonic token has moved below the 50-period and 100-period moving averages, a sign that bears are in control. The MACD indicator has formed a bullish divergence pattern.

Sonic token will likely continue falling as sellers target the next key support to watch being at $0.20.