• Tokens like Aptos (APT), Moonbeam (GLMR), Axie Infinity (AXS), and dYdX (DYDX) have seen a rise in their prices due to upcoming token unlocks.
• Token unlocks occur when a large amount of tokens are released into circulation, which is usually considered bearish.
• Examples of token unlocks include the dYdX (DYDX) token unlock which was postponed, and the Ronin (RON) token unlock which caused the price of RON to jump by 25% within three days.
The crypto market has been in a state of perpetual bullishness recently, making it an exciting and profitable time for investors and traders. While the market as a whole is doing well, some tokens have been particularly impressive, with Aptos (APT) dominating headlines with a 450% rise in three weeks, and Moonbeam (GLMR), Axie Infinity (AXS), and dYdX (DYDX) doubling or nearly doubling their value over the same time. The trigger that often sparks such an impressive rally is the upcoming token unlock.
Token unlocks occur when a large amount of tokens are released into circulation, which is usually considered bearish. Despite this, tokens often experience a surge in prices in the days leading up to the unlock as traders and investors anticipate the potential gains. An example of this is the dYdX (DYDX) token unlock, which was scheduled to increase the existing 156 million token supply by nearly 88% within a week. The price of DYDX declined by 16% two days before the scheduled event, however, and made a steep 52% u-turn instantly after dYdX Foundation announced its plan to postpone the scheduled 130 million DYDX token unlock until December 1, 2023.
Another example of a token unlock is the Ronin (RON) token unlock, which occurred on January 27, 2023. This event saw 22.19 million RON tokens unlocked, which accounted for 2.2% of the token’s one billion total supply. The price of RON jumped by 25% within three days before the scheduled RON token unlock, further contributing to its steady 180% growth in a month.
The surge in prices ahead of upcoming token unlocks is reflective of the sentiment in the market – traders and investors believe that the token unlocks will have a positive effect on the asset’s price. The surge in prices is also often driven by speculation and FOMO, as traders and investors try to get in on the action before the unlock is complete.
Although token unlocks may be considered bearish, the surge in prices ahead of the event is indicative of the positive sentiment in the market. The surge in prices is often driven by traders and investors looking to capitalize on the potential gains that could come with the unlock. It remains to be seen whether this trend will continue in the future, but it is clear that token unlocks are likely to have an impact on the price of the asset.