Token Unlocks: What You Need to Know

Token unlocks are reoccurring events in the crypto sector. It’s almost impossible to prevent them. In general, token unlocks are part of each crypto

Token unlocks are a recurring event in the crypto space. They are almost impossible to avoid. Generally speaking, token unlocks are part and parcel of each crypto project’s journey.

They also tend to work negatively on the project’s token price. However, that is not always the case. Several factors at play can influence a token price during token unlocks. So let’s take a closer look at what the deal is with these token unlocks.

Where Can You Find Information About Token Unlocks

You can find information about token unlocks on several platforms. Some examples are, for instance:

Source: Token Unlocks app

At Altcoin Buzz, we also have monthly videos on our YouTube channel about these unlocks. Here’s a link to our most recent video. Another interesting research tool is Messari’s recent report on token unlocks. In this report, Messari looked at 641 unlock events and their data. They included 41 assets and looked for patterns in market reactions.

The majority of unlocking events were with less than 2.5% of the circulating supply. Events that exceeded more than 5% were less than half of the researched projects. Unlocks in general hurt an asset’s price.

However, there can also be other factors at play that can influence the price of a crypto asset. These factors can override a token unlock event. For instance:

Tokens are rarely traded in isolation; their prices are influenced by factors such as market sentiment, new product launches, and narrative shifts.

Although token unlocks typically have a negative effect on a token’s price relative to BTC, this is not always the case. pic.twitter.com/Wd8a1SLfsj

— Stacy Muur (@stacy_muur) September 17, 2024

So it can happen that despite a token unlock, the price of an asset appreciates. This is not unheard of. It also shows that you do not necessarily have to sell tokens before an unlock event. Since selling tokens before an unlock event is an often-used tactic. You sell your tokens before an unlock event and buy them back at a lower price after the unlock.

Token Unlock Patterns

It is possible to identify certain patterns in token unlock events. So let’s take a closer look at this.

So there is no clear answer if you should before an unlock event. There are various market conditions and sentiments at work. For assets with upcoming unlock events, you need to be aware of them. See the picture below.

Upcoming Cliff Unlocks

We also would like to give you an idea of upcoming cliff unlocks. These can be at times significant. Accordingly, they can have an impact on the price of these assets. So let’s take a look, since you want to be aware of these unlock events.

What is of interest here, is that unlock events can vary from project to project. Unlock events can be daily, weekly, monthly, or quarterly emissions. However, Ondo Finance has big yearly unlock events. See the picture below.

Source: DeFiLlama

Conclusion

Token unlocks are a part of the crypto space. They can affect the price of crypto assets. In general, a token unlock will most likely depreciate a token price. However, that is not always the case. It is hard to predict what the best course of action is before a token unlock event. You need to look at market sentiment, or previous unlock price reactions. There are also various other indicators in play. That’s where token unlock sites can come in handy.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.

We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.

Copyright Altcoin Buzz Pte Ltd.

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