$730 mln worth of cryptocurrency tokens will be unlocked in June, including dYdX, Arbitrum, ApeCoin and others. What will the unlock do for the market? And why is it happening?
The unlocking of $730 mln worth of cryptocurrency tokens in June 2024 will clearly exert an impact on the market. The main effect will be a sharp rise in the supply of these tokens in circulation. Typically, when multiple tokens concurrently enter the market, this causes price pressure as token holders seek to sell their assets.
However, the price impact will depend on how much of the new tokens are immediately sold on the open market. Often, large holders, such as project teams and investors, hold on to their tokens since they are interested in the long-term success of projects.
The reason why this unlock is happening is due to the initial distribution of tokens when the project was launched. In the early stages, tokens are locked or “frozen” to prevent their immediate sale, which could destabilize the market. As the project progresses, these tokens are released according to a predetermined schedule to ensure fair distribution among all stakeholders.
Overall, large token unlocks tend to unleash market volatility, although the actual impact depends on how many holders decide to offload their holdings. In any case, these events are key milestones in the development of relevant blockchain projects.