Altcoin Selling Pressure Looms as $500M in Token Unlocks Scheduled This Week

Unlocks increase the total available supply of a certain token but don’t necessarily hit the open market immediately.

Nearly $500 million in tokens are set to be unlocked this week, potentially putting downward pressure on prices for some cryptocurrencies.

According to data from TokenUnlocks, a platform that tracks the scheduled release of tokens from various projects, a total of $463 million in tokens will be freed to investors, teams and ecosystem advisors.

The largest unlock will be 37 million WLD tokens, valued at over $80 million at the current market price. This emission will increase the token supply by 7%.

Layer 2 network Taiko will have the largest unlock by supply at 15% of its total.

Of the total, tokens with a market value of $200 million will be released as a "cliff" - a colloquial term for a large number of tokens released in one go.

Solana's SOL will see $80 million unlocked as part of an ongoing "linear" plan, where tokens are emitted and absorbed by the market.

Unlocks typically increase the total available supply of a certain token, but they don't necessarily hit the open market immediately.

However, the anticipation of investors or traders expecting token receivers to sell their newly unlocked tokens can lead to a preemptive sell-off, reducing the token price before or as the tokens are unlocked.

According to a 2023 research from TheTie, most losses from unlocks typically arise after an average of two weeks from the event.

On the other hand, if the market perceives the unlock as a sign of project progress or the tokens are expected to be used for staking governance or other utility purposes that do not involve immediate selling, the price might remain stable or increase due to positive sentiment.

Moreover, some projects might choose to re-lock a portion of the tokens to be released, adjusting the unlock schedules based on market conditions or community feedback.