Crypto Investors Face 50% Drawdown in Locked Positions

Early-stage crypto investors who locked their positions have faced significant losses, with an average drawdown of nearly 50% compared to over-the-counter (OTC) valuations from May 2024. This stark reality was highlighted by data published by STIX founder Taran Sabharwal on April 22, revealing that holders could have exited their positions at double the current spot prices just a year ago.

Sabharwal's data compared fully diluted valuation (FDV) estimates from May 2024 against current FDVs as of April 2025 for major tokens. The analysis included tokens such as JITO, BERA, ZRO, WLD, TIA, IO, W, ZK, EIGEN, SCR, and BLAST. The findings showed widespread devaluations across these top tokens, with SCR and BLAST recording the largest year-over-year drawdowns at -85% and -88%, respectively. EIGEN followed closely with a -75% drop, while other tokens like ZK (-64%), W (-50%), IO (-48%), and TIA (-44%) also posted substantial declines relative to their locked OTC valuations from the previous year.

JITO was the sole exception, posting a +75% gain relative to last year’s valuations. This disparity between OTC valuations and current spot prices underscores the risks associated with investing in illiquid, locked positions during early-stage token rounds. While these investments are typically structured with the expectation of long-term upside, market volatility and project-specific factors over the past 12 months have led to substantial underperformance relative to initial valuations.

In the same period, the 22 sectors in the crypto market, in addition to Bitcoin (BTC) and Ethereum (ETH), experienced an average correction of 40.7%, based on Artemis data. This performance is nearly 20% better than that of locked tokens, indicating that many early-stage token investors who committed to locked positions may have missed better exit opportunities in the secondary market throughout 2024. Locked tokens typically come with vesting schedules or transfer restrictions, which prevent immediate liquidity and expose holders to market shifts during the lock-up period.

The data shared by Sabharwal also reflects broader market conditions affecting fully diluted valuations across the crypto sector. Newer projects face intensified pressure in secondary markets compared to their initial fundraising rounds. This analysis highlights the challenges faced by early-stage crypto investors and the importance of considering market volatility and liquidity constraints when making investment decisions in the crypto space.