@harleywallis

Concentrated VC holdings can magnify market volatility. When a few large investors control substantial token portions, their actions—selling, reallocating, or staking changes—can trigger outsized price swings. This risk is especially pronounced during unlock events or when liquidity is low. In contrast, a more distributed ownership structure reduces systemic sell pressure and spreads influence across a broader base. While VCs often bring strategic support and credibility, excessive concentration creates dependency on a small number of actors, making price discovery sensitive to their decisions. Monitoring VC allocations, combined with vesting schedules and exchange flows, is critical for understanding potential volatility. Proper diversification and gradual unlocking mechanisms can mitigate this amplification and stabilize market dynamics.

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