CandleFocus

90% of token unlocks drive prices down, declines begin a month ahead

Author: Content Editor
A recent report by Keyrock revealed that 90% of token unlocks result in negative price pressure in the cryptocurrency market. These unlocks occur when previously locked tokens are released and flow to teams, investors, and ecosystem funds according to predetermined schedules. The report highlights the importance of tracking these schedules for traders to effectively time the market. Even before the tokens are released, unvested investors' selling and hedging strategies contribute to downward pressure. Prices often stabilize within two weeks of the unlock event. Large unlocks of over 5% of the total supply cause immediate price volatility, but their effects are gradual due to partial selling and slow hedging. Frequent, smaller releases consistently create downward pressure, although their cumulative impact is less dramatic. Prices start declining up to 30 days before the event due to retail anticipation and sophisticated hedging strategies by institutional players. The type of recipient of the unlocked tokens significantly influences price outcomes, with team unlocks having the most damaging impact. On the other hand, ecosystem unlocks have a positive effect on the market by promoting long-term network growth and stabilizing prices. Investor unlocks are considered controlled and predictable. Although token unlocks lead to short-term price suppression, the report suggests that optimal entry points occur 14 days after a significant unlock once volatility has subsided. Traders should consider selling 30 days before the event as prices tend to decline before the unlock.

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