On the flip side, temporary bearish crypto catalysts often mark the local or cycle bottom. A great example is when the original Pudgy Penguins founders allegedly misused funds and were ousted—this marked the low point, and the project later became one of the top NFT collections. The key mistake traders make is assuming every bearish event is permanent. To avoid this, just ask: has anything fundamentally changed besides price? Is the project still functioning? Is the team still building? Is the community still active? If yes, then it’s likely temporary. Permanent bearish catalysts, on the other hand, are harder to identify and usually explain ongoing underperformance. One notorious example is when insiders constantly sell tokens as they unlock, creating a lasting price drag.
However, there’s nuance. Data from tokconomist shows crypto prices typically dip before unlocks as retail panics, expecting a dump—yet statistically, unlocks often precede a rally. It makes sense: insiders usually prefer to sell gradually at higher prices, often helped by temporary bullish catalysts like upgrades or partnerships. Also, poor performance often stems more from weak demand than new supply. Few insiders selling into low demand can cause outsized drops. That’s why token unlocks need case-by-case analysis. SOL had a 90% unlock in Jan 2021—then rallied 50x. SUI did similarly well despite heavy unlocks. Often, whales use unlocks smartly while retail self-sabotages.