Bitcoin is back? Tier 1 investors are already dead from locked positions

Written by: TechFlow

On April 23, the news reignited market sentiment as Trump announced a reduction in tariffs on China.

Investors confidence in risky assets quickly recovered, with BTC quietly rising 7% and prices returning to $94,000.

Everything seemed to come back to me overnight.

BTC is one step closer to breaking through its historical high of $100,000 at the beginning of the year. Twitter is full of expectations for a new round of bull market. Traders in the secondary market are busy chasing ups and downs, and the market seems to have returned to the frenzy of spring in 2021.

However, this return of sentiment is not for everyone.

They are the ones who are busy, while primary investors may remain silent when faced with signs of a bull market rebound.

Bulls die from lock-up

The good news that BTC has returned to $94,000 has made secondary market investors cheer, but for primary market investors, this carnival seems like a distant dream.

Most of their tokens are in a locked state and cannot be traded freely, and the market performance in the past year has caused them heavy losses.

A graphic from STIX (@stix_co) reveals this harsh reality.

@stix_co is a platform focusing on क्रिप्टोcurrency OTC (over-the-counter) transactions, providing liquidity support for locked tokens.

The above chart compares the valuation changes of multiple tokens in May 2024 and April 2025: May 2024 is the valuation of these tokens when they are traded over the counter (that is, the price that primary investors can sell them at when locked), while April 2025 is the actual valuation of these tokens in the open market (that is, the current market price).

The results show that, on average, the valuations of these tokens fell by 50% within a year.

Let’s look at some specific examples.

BLASTs over-the-counter valuation last year was $250 million, but now its market valuation is only $30 million, a drop of 88%; EIGEN fell from $600 million to $150 million, a drop of 75%; SCR was even worse, falling from $170 million to $25.5 million, a drop of 85%.

Almost all tokens fell sharply, with the exception of JTO, which rose from $100 million to $175 million, a 75% increase.

But this is just a special case and cannot cover up the overall bleak situation.

Simply put, if the tokens held by these first-tier investors were not sold through OTC transactions last year, the average value of the tokens held would have been cut in half, and some would even be reduced to only 10% or 20%.

As a background, over-the-counter trading means that before the tokens are unlocked, primary investors can sell them in advance through private transactions, usually at a discount.

Taran mentioned in the post above that when these tokens were traded over the counter last year, the price was about 80% to 90% of the valuation.

That is to say, if they sold it last year, they might have only lost 10%-20%, or even no loss. However, some investors chose to hold it for a year and wait for it to be unlocked, but the value of the tokens fell by an average of 50%, and some even fell by 70% to 80%, which greatly reduced their wealth.

You might say that their investment cost price is low, so even if it has fallen so much, they can still make a profit.

But the problem is that there is something called opportunity cost in economics. As an investor, what is more painful than making less money (or even losing money) is the loss of theoretical opportunity cost.

In the best-case scenario, Bitcoin (BTC) has risen 45% over the past 12 months.

If Tier 1 investors had sold their tokens last year and converted them into BTC, their money would have probably grown 1.45 times by now.

But now, their tokens are only worth 0.5 times, and even after being unlocked in the future, they may have to be sold at a 50% discount, and may eventually be worth only 0.25 times.

In other words, compared to the increase in BTC, their actual loss was as high as 82.8%; even if calculated in US dollars, they lost 75%.

Its like watching others make a lot of money while your own assets are getting smaller and smaller.

“Bull return” may mean death for them due to lock-up.

The most annoying thing about locking up the position for a year and losing half of it is that:

After spending a lot of effort on researching, comparing, identifying and investing in projects, it would be more economical to just hold the BTC directly.

In the classic investment book A Random Walk Down Wall Street, there is a famous Gorilla Throwing Dart Theory.

Author Burton Malkiel suggests that if a blindfolded ape were allowed to randomly throw darts and select a portfolio of stocks, its long-term returns might be no worse than those of a professional investors careful selection.

This theory was originally used to satirize the ineffectiveness of over-analysis in the stock market, but now it is particularly ironic when applied to the cryptocurrency market.

Tier-one investors spend a lot of time and energy studying white papers, analyzing project prospects, and even locking up their positions for a year in order to gain high returns, but the result may be: it might as well be like throwing a dart at Bitcoin.

BTC has risen 45% in the past year, while their locked tokens have fallen by an average of 50% or more.

The valuation and investment logic of the entire altcoin may urgently need to be reshaped.

Spring wont come back

Will the next wave of crypto altcoins still involve locking up in this way?

VCs enter the market at low prices, and the lock-up mechanism was originally intended to protect the early stages of the project and prevent early investors from selling in large quantities and causing price crashes. However, judging from the data over the past year, this mechanism has also caused primary investors to bear huge risks.

The original post of the above chart also mentioned that more than $40 billion of locked tokens will be unlocked in the future, which means that the market may face greater selling pressure. If new tokens continue to be locked at high valuations, investors may fall into a vicious cycle of locking up for a year and losing half of the value again.

Obviously, the lock-up method is no longer suitable for the current market environment.

Will primary investment in the crypto market still be hot? Can the spring of primary investment come back? Judging from the current situation, the answer may not be optimistic.

In the past few years, the high valuations of altcoins were often based on market frenzy and liquidity premium, but as the market gradually matured, investors began to pay more attention to the actual value and liquidity of the projects.

The high risk of locked tokens has deterred first-tier investors, and more and more people may choose more transparent and liquid projects.

Some emerging trends have emerged: such as shorter lock-up periods, lower valuation multiples, and even directly reducing the bubble of primary investment by issuing memes;

Of course, it is also possible that it is just old wine in a new bottle. Under the fairer appearance of मेम सिक्का, the first-level logic still exists, and the game is set up to make you unable to see the existence of the first level.

For the entire crypto market, a more transparent mechanism has become particularly important. The lock-up mechanism also needs to find a better balance point, which can protect the early stage of the project while not letting investors take excessive risks.

But the question is, if the first level doesn’t lose money, the second level doesn’t lose money, and the leeks don’t lose money, then who will lose money?

Crypto tokens do not produce value, but transfer value; if someone makes money, someone else must lose money.

The spring for one group of people is bound to be the winter for another group of people.

This article is sourced from the internet: Bitcoin is back? Tier 1 investors are already dead from locked positions

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