How Are Token Unlocks Affecting Cryptocurrency Prices?

A recent Keyrock analysis reveals that token unlock events often lead to downward price pressure, with around $600 million in previously locked tokens circulating on predetermined schedules.

These unlocks affect teams, investors, and ecosystem funds, and traders need to time the market carefully, as full price effects can take up to 30 days to materialize.

Before tokens are unlocked, preemptive selling and hedging by investors contribute to early price dips, typically stabilizing within two weeks. While large unlocks might seem impactful, their effects tend to unfold gradually due to partial selling or hedging.

Frequent smaller releases, however, create consistent but less dramatic downward pressure. Retail anticipation and institutional hedging often trigger price declines up to 30 days before the unlock event.

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The report also highlights how the recipient of tokens influences market reactions. Unlocks for teams often cause significant price drops due to lack of coordination, while ecosystem unlocks (used for liquidity or infrastructure) stabilize prices.

Investor unlocks tend to have a controlled, minimal impact, as early investors use strategies like OTC sales to prevent market disruption.

Despite the risks, token unlocks offer opportunities. The best time to enter the market is about two weeks after a major unlock, once volatility has subsided. For exits, traders should sell 30 days before the event, as prices typically start falling in anticipation.

Alexander Stefanov