Keyrock Reporter It was noted that 90 percent of unlocking tokens has a negative impact on prices, even though it can take 30 days for the full effects to manifest.
A total of $600 million in previously-locked tokens is regularly distributed. These unlocks are distributed according to pre-determined schedules.
It was noted in the report that traders who want to be able to trade effectively should keep track of these schedules.
Even before tokens are released, unvested investors’ preemptive selling and hedging strategies contribute to downward pressure, with prices typically stabilizing within two weeks of the unlock event.
While intuition suggests larger unlocks would have a proportionally more significant impact, Keyrock’s data reveals a more nuanced picture.
The price can be volatile immediately when events release over 5%. Their effects are usually gradual, since investors cannot sell these huge volumes or hedge them.
The cumulative effect of smaller, frequent releases is not as dramatic, but they do cause downward pressure.
It is interesting to note that prices start dropping up until 30 days before an event, for the majority of unlock sizes. This trend can be attributed to retail anticipatory behavior and sophisticated hedging by institutional players.
Recipients matter
This is because the category of recipient has an impact on prices, and team unlocks are considered to be one of most harmful categories. It is suggested that teams are often lacking in coordinated strategies for sales, resulting in severe price drops as tokens are liquidated by individual members.
The unlocking of the ecosystem is positive. The token distributions typically go towards infrastructure, incentives for users, liquidity, and user incentives. This promotes long-term growth of the network and stabilizes prices.
Investor unlocks can be considered predictable and controlled. Early investors can minimize disruptions to the market by using sophisticated strategies such as over-the counter sales and option hedging.
Risks and opportunities
They create opportunity, even though token unlocks are often short-term suppressors of price. Report suggests that the optimal entry point occurs 14 days following a major unlock, once volatility is reduced.
For an exit, traders can sell 30 days prior to the event as the prices usually begin falling before the event.
Posted In: Crypto, Featured, Tokens The Author 
Gino Matos
Gino is a journalist and law graduate with over six years experience. He focuses his expertise on Brazilian blockchain and the developments of decentralized finance.
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Liam ‘Akiba’ Wright
Also known as “Akiba,” Liam Wright hosts the SlateCast and is Editor-in chief at CryptoSlate. He thinks that technology decentralized has the ability to create positive and widespread change.
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