The impact of token unlocks on altcoins

Is this a warning from the news or could it mean something more? With Ton's $132 million token unlock, is this enough to drag altcoins into the red? A lot of crypto projects don’t release all their coins right away. Instead, a big chunk stays with VCs, teams, private backers, and foundations. These groups can mess with the price by boosting the supply whenever they want. So, when we hear ‘unlock’ related to a project, it usually sends shivers down my spine, thinking about a price drop and how early investors might dump their coins, making the market shaky. Unlocking tokens is a common thing in the crypto world, helping distribute tokens out there. But when new coins hit the market, it leads to a sudden supply spike, and very often, VCs or investors start selling their tokens. This creates sell pressure linked to the unlock, and many promising projects can end up looking like a drain for investors. So, is this just a clever tactic to tank the market, or are we just seeing temporary jitters from investors?

Generally, token unlocks sparks deep fear in the market because of the sudden increase in supply that will flood the system and it normally triggers the big holders of the token to sell off and take some profits, which in turn creates pressure on the token and it eventually dips down the price, it doesn't even matter if the coin or token has strong utilities or not, I mean grass token is a perfect example of such situation.

That's not that much if it's about $132M but it can create a domino impact to the whole market. But I wouldn't exaggerate to say that it's enough to turn the market red. It might be temporarily. But don't so be negative about that but these token unlocks really have some effect after it happens. We'll never know until we see how the market will react after TON has already unlocked those tokens. We've got few days left to see how the market will turn either red or green by that time.

You can say so for TON, token unlock usually frighten investors holding the particular token. Those who are holding for a short term will be pushed to sell before the unlock, in case the market goes to the red, during unlock there is no way that the price of the altcoin will increase, there is a good reason to be worried for the unlock, who knows what will happen, if the altcoin is good, they will surely return back positively.

This is the reason I don't like projects where a large part of the token is in the hands of the VCs or few individuals, they can be overtaken by great and they will crash the market. Remember that they just allocated those token to themselves, it will not cost them anything to dump them whenever they are unlocked. Many small projects hardly survive token unlock because the core teams that have those large allocations end up dumping the token after collecting enough money from the TGE.

Well, it really depends on which allocation is being unlocked. From what I’ve seen in the market, when a token unlock event is approaching, the price often goes up first and then drops around the actual unlock date. In the end some unlocks don’t affect the price at all because it’s crucial to understand which allocation is being released. Teams know that flooding the market with newly unlocked supply would create FUD and push the price down even further. That’s why most projects don’t sell everything immediately after an unlock unless the funds are genuinely needed for project development.

Any amount of money that you think you can make from new altcoins with crazy unlocks can be made from altcoins that already have all its tokens available to the public, do not fall in love with new altcoins, even if they have something new to offer wait them out, let the unlocks comes to near end. There will be bear market and these type of altcoins with crazy unlocks will bleed even more, I'd say wait it out and let the unlock be a thing of the past before buying, it is also not a must as there are so many good altcoins with 100% token unlocked.

That is the effect of it, many supply will be released to the market and that's why before it happens the holders that are longing to take some profits will have to sell. Because if they're not going to sell, the price will go down once the token unlock is done. They know how to react from it and that's the reason they need to do something if they are concerned of the fluctuation that can happen from holding it. Because if not, they'll just have to accept it that the value will decrease from that event.

Token unlock is fine if the market is liquid, maybe there will be a slight dump. These tokens are already agreed upon tokenomic release so everybody that put money into TON should know that this thing will happen or can obviously see it from miles away. If the altcoin is good, impact supposedly containable, if the altcoin is garbage, there'd be massive dump. So it really depends, at the end of the day.

The token unlock doesn't always lead the crypto to dump. This totally depends on how the owners of unlocked tokens treated their unlocked tokens. The fact that 22 january has passed, and no significant dump happened to the TON, right? So the analogy token unlock is always being followed by sell-off is not always right. As long as the token unlock was not changing the hand to the end point user, so less  pressure. You also forget to mention the unlocked token related to the TON believers fund, which linked to the all of TON believers. Ton Believers focus on ecosystem instead of cashing out their TON.

Starting from your first argument TON isn't affecting altcoin markets more then any altcoin itself. So, no. Bear market started while ago and would have started regardless what TON does. No one but TON holders even care about TON. And even if i cared about TON, 132M is pocket money compared to all the tokens that have mined, staked, shared and released this whole time and growing the overall supply. And then there are just people pouring their bags to buy walls because everyone wants their profit, or cut their losses at some point.. People used to blame bounty hunters for selling their tokens cheap, but it's a combination of reasons. Mostly the reason is that nothing goes up forever, and with every bullrun comes a bear sun, like sunrise to sunset.

That make sense that there's not that much drop that has happened and I think that you right with that. It depends on the token owners if they're going to ride the news just like what it did. If there's not a lot of action done by the investors, then everyone still gets to hold it. I agree with this but, there's also a limit until when they can believe in it.

The unlock period is part of the coin's roadmap; the developers are fully aware of the negative impact if they dump a big portion of the token. So they need to fully develop their roadmap and market their platform, so they can negate the bad impact that may cause as a result of the unlock. If there is market demand, the coins' support can absorb negative feedback, but if there's weak support, the price will be affected by it.

I think if altcoins' supply shocks and road maps were predictable, people would have confidence in altcoins like Bitcoin, but surprisingly, no new developers or scientists have thought about this yet. However, if altcoins had a small and limited supply, would these have been free from this kind of impact? Or is it a traditional rule that no one has been able to break so far?

En General everyday there is a token Unlock from various altcoin as you can see, there is almost 1 Billion altcoin unlock each week, If they decided to sell their token so it will on circulationg supply and the price might down. it will be diluted especially if there are token with no max supply it will hurt if the product cant compete or didnt make something new.