Why Does Unlocking Tokens Often Affect Crypto Prices?
In the world of crypto, you may often hear about "token unlocks." This is the moment when a large number of previously locked tokens (which could not be traded) are suddenly released into the market.
This event often triggers concerns among investors, and there are strong reasons why this can significantly affect prices.
The main reason is the increase in the supply of tokens in circulation. When tokens are unlocked, the number of tokens available for buying and selling on exchanges automatically increases. If the demand for those tokens does not increase proportionally or even remains stable, basic economic laws will apply: an increase in supply without a significant increase in demand will tend to push prices down.
Investors often sell newly unlocked tokens to realize profits, or because they no longer wish to hold those tokens. This large-scale selling adds selling pressure in the market, which in turn can lead to sharp price declines. Therefore, token unlock events become an important focal point for investors to predict potential price movements.
