Token Unlocks: Impact on Market Prices
Research conducted by The Tie suggests that coins tend to experience a drop in value leading up to an unlock event. This week, three cryptocurrencies are scheduled to implement unlocks: Lido (LDO), Avalanche (AVAX), and Yield Guild Games (YGG). Here are the key points:
1. Lido DAO (LDO) Unlock:
– 8.5 million LDO tokens will be unlocked on Aug. 26, accounting for approximately 0.97% of the total supply.
– The tokens will be distributed to existing investors who hold more than 300 million tokens.
– LDO’s price has declined by 8.5% in the last week but remained stable in the past 24 hours.
2. Avalanche Token (AVAX) Unlock:
– AVAX will release 9.54 million tokens, worth $102.86 million, on Aug. 26, representing 2.77% of the circulating supply.
– Previous unlocks for AVAX were well-received by the market.
– AVAX’s price has dropped by 13% in the last week and 1.8% in the past day.
3. Yield Guild Games (YGG) Token Unlock:
– YGG’s token has experienced a significant decline, down nearly 59% in the last year.
– YGG is set to release 12.2 million tokens, worth $2.87 million, on Sunday, which accounts for 6.6% of the circulating supply.
– YGG’s price has lost an additional 30% in the last week and is down 2% in the past day.
Token unlocks can have varied effects on market prices. While they are generally considered bearish, the impact depends on the specific circumstances. The Tie’s research shows that coins usually decline before the unlock event. However, if the liquidity increase exceeds the average daily volume by more than 100%, prices tend to rebound before falling again within two weeks. This suggests that holders may choose to wait before selling their tokens, possibly due to initial relief that the market was not flooded with new supply.
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