Token Unlocks, a leading authority in cryptocurrency analysis, has unveiled its comprehensive ‘Annual Report 2023: Unlock Revolution.’ The report, which presents a meticulous analysis of approximately 600 token unlock events, challenges entrenched perceptions about the relationship between token unlocks and price movements.
Deciphering Unlock Categories
The report delineates five primary unlock categories: Community & Other, Founder/Team, Private Investors, Public Investors, and Reserved. By examining price fluctuations 15, 7, and 3 days before and after the unlock date, in conjunction with the number and proportion of released tokens, the report elucidates the impact of these events on token prices.
Challenging Prevailing Perceptions
Contrary to the widely-held belief that token prices invariably plummet prior to large unlock events for private investors, the report’s findings highlight a different reality. Prices generally see an uptick both before and after the unlock date across most categories. However, tokens earmarked for Public Investors often experience a price decrease post-unlock.
Insights into Specific Categories
The ‘Community & Other’ category revealed that token prices tend to be higher before the unlock than on the unlock date itself, despite a large ratio of unlocked tokens to circulating supply. Founder/Team unlocks do not trigger price drops, contradicting another common perception. In the Private Investors category, a price dip is observed before the unlock, followed by a noteworthy increase afterward. Tokens in the Reserved category, subject to community voting for expenditures, exhibit inconsistent price movements.
Understanding Market Dynamics
The report hypothesizes that apprehensions about prospective sell-offs by private investors may instigate price drops before unlocks. However, this is typically succeeded by a price surge post-unlock, indicating a complex interplay of market forces at work.
A case in point is the impending unlock of 88.31 million SAND tokens on February 14. The report speculates the potential impact on the token’s price, citing on-chain metrics and analysis indicative of a bearish trend for SAND. Factors such as a decrease in active addresses and volume, an escalation in SAND reserves on exchange wallets, and the potential for selling pressure all hint at a possible drive in price reduction.
Given the precedent of a 20% price decline post a previous unlock event in August 2023, a similar trend could potentially emerge. The report underscores that these dynamics need to be closely monitored by investors and stakeholders alike.
