Assessing what the steep drop in ApeCoin's Q3 FDV meant

APEs The fully diluted valuation fell to its lowest level ever in September
There was little demand for the APE token unlock event in the third quarter, causing the altcoin’s value to drop

from ApeCoin [APE] The fully diluted valuation (FDV) fell to an all-time low during the third quarter of the year. This helped the Metaverse-based token close the three-month period at an all-time low, according to Messari’s latest report.

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A coin’s FDV tracks its market capitalization when the total supply is in circulation. When a coin’s FDV falls to its lowest point, it means that, based on the prevailing market price and the total supply of coins, the total value of the coin is at a minimum.

According to Messari, APE’s FDV had fallen to $1.1 billion by mid-September, with average daily FDV falling more than 50% within a 90-day period.

Source: Messari

APE’s token unlock event and its impact

Between July and September, APE saw a 53% increase in the number of tokens unlocked than the previous quarter. A total of 71.8 million APE tokens were released, representing 13% of the circulating supply.

Token unlock events can be bearish for an asset’s price as they see the injection of previously frozen liquidity into the market. For crypto assets with low traction, the increase in supply is not often met by a corresponding increase in demand, resulting in downward pressure on the price.

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This has been the case for APE, as the general decline in Metaverse-related activity that has characterized the year has led to a decline in trading activity related to the altcoin.

Messari found that APE’s token velocity – which measures the frequency with which a token changes hands – also dropped slightly.

“Since velocity measures how often a token changes hands, the drop in velocity indicates that users are trading and transferring the asset less frequently than in the second quarter,” the on-chain data provider said.

Source: Messari

Instead, the currency was used more for governance activities during the quarter.

Interestingly, while APE’s pricing and trading activity fell during the period under review, the company recorded a 31% increase in the number of new portfolios. According to Messari, the increase came despite transfer volume falling 49.6% and the price of APE falling 51%.