Every week we provide insights into popular assets and hot topics in crypto, so you can easily learn more about the crypto market in bite‑sized pieces.
In this Crypto in Focus, we take a closer look at Token Unlocks, a very important but often underestimated crypto indicator.
What Is a Token Unlock
A token unlock is the process by which previously locked tokens (held by founders, early investors, team members, or the treasury) are released into circulation.
When these tokens become tradable, it can have a significant impact on the token’s price and, by extension, the value of your portfolio.
Why Token Unlocks Matter
- Supply Pressure: When a large number of tokens unlock, there is a sudden increase in available supply, which can lead to downward price pressure if demand doesn’t match.
- Market Anticipation: Price movements often start before the unlock event, as traders anticipate the sell‑off.
- Unlock Types:
- Linear unlocks release tokens gradually over time.
- Cliff unlocks release a large batch all at once, which can be more disruptive to price.
- Emission-based unlocks (e.g., from staking or protocol emissions) depend on network activity.
- Psychological & Strategic Effects:
- Token holders who unlock may sell, especially early investors, causing short-term volatility.
- On the other hand, unlocks tied to ecosystem development or team incentives can support long-term growth.
- Risk of Large Unlocks: Large unlocks (especially > 5% of supply) can lead to steep price declines.
- Transparency & Timing: Well‑communicated unlock schedules help mitigate risk and build trust.
Examples & Recent Trends
- Research shows that for many unlock events, stock‑market style dilution happens: prices often decline in the 30 days before the unlock.
- According to studies, “team unlocks” (tokens for founders or employees) tend to have the strongest negative price impact - on average, a ~25% drop.
- On the other hand, unlocks for ecosystem development (liquidity rewards, grants) can be net positive, as they support project growth.
Upcoming & Relevant Token Unlocks
There are often millions of dollars worth of tokens scheduled to unlock in the coming weeks, which could lead to short-term volatility. (For example, tracking sites like token.unlocks.app track these events in detail.)
Trade Crypto at Change
With Change, you can trade over 140 cryptocurrencies - and knowing about unlocks can give you a strategic edge.
Stay informed and trade thoughtfully.
Happy trading!
