🩷Token Unlock
Definition🐆
Token Unlock refers to the process of releasing tokens that were originally locked in a contract and not tradable, to specific holders (such as team members, investors, community, etc.) according to the project's set “lock-up” or “vesting” plan, allowing them to enter the circulating market.
Typically used to prevent teams and early investors from “dumping” their tokens, it also encourages long-term building and ecosystem development.
🌿Data Conclusion: Price usually falls
Statistics show that about 90% of token unlocks have a negative impact on price. The new circulating supply brought by the unlock often triggers selling pressure and price volatility.
Especially when the unlock represents a large proportion of the circulating supply, or when the beneficiaries are team members/early investors, the selling pressure is more evident.
Before the unlock, many market participants will sell in advance to hedge. If the beneficiaries immediately sell after the unlock, it will definitely exacerbate the decline.
If the unlock ratio is small, the increase in circulating supply is limited, and the actual impact may be relatively mild. In a bull market, selling pressure is easier to absorb.
🌿Key Factors for Judging the Magnitude of Decline
Proportion of unlock quantity to total circulating supply: a high ratio indicates greater risk.
Type of beneficiary: team distribution carries more risk, while ecosystem incentives and investor distribution pressures are controllable.
Market conditions and project fundamentals: in a strong market, the impact of the unlock is limited; in a weak market or when project fundamentals are poor, the decline is greater.
🌿Although most unlocks bring negative pressure, for long-term optimistic investors, a price drop may instead present a buying opportunity. Some projects have mitigated selling pressure through transparent unlock planning and flexible management.
🌿Conclusion: Token unlocks are likely to lead to price declines, especially when the unlock scale is large and market sentiment is weak. However, the specific situation needs to be assessed by considering the unlock ratio, the goals of beneficiaries, and market conditions comprehensively.
