The upcoming week is poised to witness a significant movement within the cryptocurrency market, with several major ecosystems scheduled to release a substantial volume of tokens. This event, known as a token unlock, is expected to inject millions of dollars worth of digital assets into the market, potentially altering the circulating supplies of the respective projects. As a result, market participants are bracing for increased volatility, with keen eyes on the trading opportunities that may arise from these unlocks.
Among the notable unlocks, the Manta Network is set to release 6.67 million MANTA tokens, valued at approximately $19.80 million, constituting 3.14% of its circulating supply. This cliff unlock event is scheduled for Sunday. Following closely, the dYdX ecosystem plans to unlock 575,340 DYDX tokens, worth $1.83 million and representing 0.72% of its circulating supply, on Tuesday.
The Avalanche network is also on the calendar for Thursday, with an unlock of 10.24 million AVAX tokens valued at $394.55 million, making up 2.79% of its circulating supply. Concurrently, the Space ID ecosystem will unlock 18.49 million ID tokens, valued at $10.88 million, accounting for 4.29% of its supply. Wrapping up the week, the ImmutableX network will unlock 8.55 million IMX tokens in a linear event, valued at $26.84 million and comprising 0.63% of its circulating supply.
The distinction between cliff and linear token unlocks lies in their distribution schedules. Cliff unlocks reportedly involve releasing tokens at specific intervals that are not daily, offering periodic liquidity injections. In contrast, linear unlocks distribute tokens more evenly over time, such as monthly or yearly, providing a semblance of price stability by preventing sudden market influxes.
The infusion of a large number of tokens into the market typically exerts bearish pressure by increasing supply. However, the current market’s bullish sentiment could see varied reactions. In some cases, increased demand during unlock periods can spur price rallies, reflecting confidence in the project’s longevity and liquidity. Conversely, in bear markets, token unlocks might lead to price declines as investors anticipate an oversupply. Additionally, the impact of a token unlock may be muted if the volume is insufficient to significantly affect the circulating supply or if the event has already been factored into the asset’s price.
