Unlock tokens are important events that have an impact on the market. Let's look at price data for five different cryptocurrency projects, from high-cap to mid-cap, to better understand how token unlocks will affect the market.

Polygon (MATIC)

On October 26, 2019, Polygon network unlocked 190 million MATIC. The tokens were distributed to private investors and early backers who participated in Polygon's funding rounds.

MATIC price action was evident in the week and month leading up to the unlock, matching the trend seen in most token unlocks. The market is preparing for the token unlock, creating buying pressure that pushes the price up nearly 30%.

After the tokens were airdropped, increased selling pressure kept MATIC's price relatively stable. However, in the month after unlocking, MATIC increased its price by more than 80%.

  • 30 days ago unlock: $0.0108

  • 7 days ago unlock: $0.0138

  • Unlock date: $0.0135

  • 7 days after unlock: $0.0137

30 days after unlock: $0.0244

LidoDAO (LDO)

Lido gained more popularity in 2022, as Ethereum transitioned to a PoS network. Its LDO token has seen a notable increase ahead of The Merge. So, in November before the token unlock in December, there was very little positive price action.

On December 18, 2022, 1.65 million LDO were unlocked and distributed to the project team, investors, and validators.

The week after token unlocking marked the peak of LDO selling pressure. Thanks to that, about 1 month later, the price of LDO nearly doubled.

  • 30 days ago unlock: $1.22

  • 7 days ago unlock: $1.03

  • Unlock date: $0.98

  • 7 days after unlock: 0.97 USD

  • 30 days after unlock: $2.01

The Sandbox (SAND)

The Sandbox was one of the first major metaverse platforms to hit the market and achieved significant success in 2020 and 2021.

One year after the famous token sale on Binance Launchpool, The Sandbox unlocked 397.7 million SAND on August 16, 2021. The tokens were distributed to investors, advisors, and the company's reserves, helping increase the liquidity and popularity of the project.

SAND followed a similar trend to Polygon's MATIC, in that increased buying pressure before the unlock pushed its price to high levels. Positive price action in the month following the unlock has seen the token increase by nearly 30%.

  • 30 days ago unlock: $0.48

  • 7 days ago unlock: $0.62

  • Unlock date: $0.64

  • 7 days after unlock: $067

  • 30 days after unlock: 0.82 USD

1inch Network (1INCH)

1inch Network peaked during DeFi Summer 2020, capitalizing on the market's newfound passion for decentralized finance.

Wanting to capitalize on its success, the DEX launched its native token 1INCH at the end of 2020, allocating approximately 97.5 million tokens to various community initiatives. 1INCH has increased in value throughout 2021 as the exchange saw record numbers of users and growing trading volumes.

231.7 million tokens allocated to the 1inch team, its advisors and external investors, were unlocked on December 1, 2021. This was followed by a larger unlock allocated to investors seed investment and the company's reserve fund, with another 295.2 million tokens impacting the market.

  • 30 days ago unlock: $4.58

  • 7 days ago unlock: $3.99

  • Unlock date: $3.69

  • 7 days after unlock: $2.72

30 days after unlock: $2.39

STEPN (GMT)

A pioneer in the move-to-earn space, STEPN was one of the best-performing platforms in the first half of 2022. Its native token GMT hit an ATH in April, as thousands of users flocked to the platform this to take advantage of the attractive rewards model.

At the beginning of September 2022, a total of 4.2 million GMT were distributed to users as part of the rewards program. This event is followed by a weekly unlock with approximately 5 million GMT distributed to users.

  • 30 days ago unlock: $0.93

  • 7 days ago unlock: $0.65

  • Unlock date: $0.69

  • 7 days after unlock: 0.73 USD

  • 30 days after unlock: 0.62 USD

Conclude

Price fluctuations before, during and after the main unlock show a repeating trend. Most of the buying pressure increases sharply for large unlocks, followed by price corrections. In most cases, this price correction is short-lived and quickly translates into slow and steady growth for the token.

However, some tokens do not follow this direction. The trend mentioned above is most commonly seen in large-cap tokens, where token unlocking creates a network effect that helps the project attract new users. This is also evident in projects that distribute a significant number of tokens to users.

Projects that distribute large numbers of tokens to private investors and internal groups are the ones that see their prices drop after the big unlock. Since most unlocks are transparent and public, the market often anticipates a dump and tries to overcome it.

Some unlocks also come at unfortunate times for the token itself and its owners. For example, STEPN's GMT reward distribution came after the protocol's heyday and coincided with a broader downturn caused by FTX.

There is also the time factor. The earlier the unlock occurs in the project's lifecycle, the greater impact it will have on the token's price. Large-cap, highly liquid projects like Polygon are typically unaffected by unlocks, as their massive networks quickly absorb any price fluctuations.

For most tokens, unlocking provides greater liquidity and creates a more stable price environment. In the months after unlocking, most tokens stabilized in price with significant increases.