The owners of pre-allocated tokens in altcoins can be returned over time. This event, known as token unlock, takes place at different times for altcoins.
Some altcoins are unlocked every 6 months, some are every 3 months, while some altcoins are monthly. We are trying to announce these token expansions to you on a weekly basis.
The Tie has published a report examining the impact of the opening of token locks on altcoin prices.
In its report, The Tie, which examined 100 tokens and 350 thousand unlocks, stated that in general token prices fell before the unlock, recovered a little during the unlocking, and then went below the level during the unlocking.
“Prices of tokens pull back a little before the unlock and if the amount of tokens unlocked represents more than 100% of the daily average volume, the price quickly recovers with the unlock. However, two weeks after the unlock, it goes even lower.
We found that two weeks after major unlocks, the price went below the price level at which the locks were opened. This shows that token holders prefer to wait a few days before selling.”
Regardless of The Tie report, it is possible to say that in similar lock openings, due to the concentration of short positions on the token, the price first moves upwards and then falls again after liquidating the short positions.
When we approach from this point of view, it can be painful to open a short position when the lock is opened just because it will be unlocked and there will be selling pressure.
*Not Investment Advice.