In the world of cryptocurrencies, token unlocks are events that often cause heightened anxiety among traders and investors. Why? Because these moments mark when large volumes of tokens become available for sale, which can sharply push the asset’s price down.
In this article, we will explain why unlocks are seen as a potential threat and review the top 5 well-known cases where unlocks led to strong market pressure.
What is a token unlock and why does it matter?
A token unlock is the process when locked or vested tokens become available for transfer and sale. This usually happens after a vesting period during which project teams, investors, and partners were unable to move their tokens.
Once the unlock begins, significant volumes can hit the market. If these tokens are sold quickly, the price falls — a classic case of supply pressure.
Why do traders fear unlocks?
- Sharp increase in market supply: Unlocking opens access to large volumes, increasing supply and lowering price if demand stays the same.
- Uncertainty about holders’ behavior: It’s impossible to predict whether tokens will be held or sold en masse.
- Lack of transparency: Some projects poorly communicate unlock dates and volumes, creating additional uncertainty.
- Connection to liquidity pool: If major holders sell immediately, this can trigger cascading sell-offs.
- Market psychology: The anticipation of an unlock often causes nervousness and mass selling even before the actual date.
Top 5 cases of price pressure caused by token unlocks
- SOL (Solana) — July 2021
After a large vesting period, the team and early investors began selling tokens, leading to a price drop from $45 to $30 within weeks. - APT (Aptos) — November 2022
A massive token unlock partly caused the price to fall from $20 to $8 as investors sold off their holdings. - LUNA (Terra) — 2021
Unlocks did not save the project from further issues, but vesting periods were accompanied by significant price pressure. - FTT (FTX Token) — 2021–2022
Multiple rounds of unlocks coincided with a general market downturn, worsening the negative trend. - MATIC (Polygon) — 2020
After the vesting period ended for early investors, a short-term price drop occurred due to increased supply.
How to protect yourself from unlock risks?
- Monitor unlock dates via crypto calendars
- Plan exits and diversify your portfolio in advance
- Use stop-loss orders to limit losses
- Keep track of market sentiment and trading volumes
- Study token distribution and vesting schedules of projects
Conclusion
To succeed in the market, it is essential to include token unlock analysis in your trading strategy, monitor the crypto calendar and cryptocurrency news to be prepared for volatility.
Why Traders Fear Token Unlocks: Top 5 Cases of Price Pressure