The impact of unlocks on the price of a token at the moment.
First you need to understand what unlocks are. Unlocking is the unlocking of coins that were purchased by investors at an early stage, long before listings on exchanges. Primary investors receive a certain number of coins for their contribution to the project, which they cannot sell until a certain point.
There are several different options and systems by which coins are unlocked, there is a classic one when investors are simply allowed to sell some part of the coin received for an investment, there is an option, such as in Aptos and Flow, when the total number of coins remains blocked for example for 2-3 years without the possibility sales, but at the same time, approximately once every 1-3 months, the interest that was accrued to investors for the total amount being staked occurs. There are many more options and systems you can and SHOULD familiarize yourself with; all this is usually indicated in the project’s tokenomics in advance and can be easily found in the public domain.
You can often hear the fairy tale “tomorrow there will be unlocks and the price will fall” or vice versa “tomorrow there will be unlocks for this coin and the price will rise” - it doesn’t work like that 😀
It is correct to pose the question not in such a way as “how unlocks affect the price” but in such a way as “how unlocks will affect the balance of supply and demand; a simple change of wording will allow you to understand where to dig))
First of all, we need to understand whose coins are locked there, these can be coins exclusively from funds or funds plus a number of private investors, this fundamentally plays a role, since if funds own locked coins, they may simply not sell them if at the moment the price is not much different from that the prices at which they received them. If many private investors own coins, then the situation is the opposite, most likely most of them will be immediately sold into the market, which will increase supply and demand will remain at the same level. If the percentage of private investors is not large, then despite the sale of their coins to the market, large funds can immediately buy them off to simply knock out weak hands, thereby the balance of supply and demand will not change, as will the price.
Often, before unlocks, with the help of the media, interest in the coin is heated, increasing demand, and in the moment before the unlock there is a pump, which immediately after the unlock fades away, since the hamsters who have recently arrived to the hype partially unload the funds if the price is already interesting for them.
I can give dozens of examples, but here it is important not to read them all, but to understand the essence, in order to understand how the price will react, it is important to conduct analytics and understand how supply and demand will change. To do this, you need to know whether the price is currently favorable for selling by funds, whether there was noise in the media the day before, what kind of unlocking system and what percentage will be released into the market, who are the owners of the blocked coins.
And as always, you need to think and analyze, and first understand the meaning and logic of the event, and not just read the headlines and fly to sell or buy.
IMPORTANT. Usually, all this is fraught with only local short-term swings and not a serious change in price and should not be a reason for action if there are long-term plans for the coin.
