Crypto Talk for Newbies: Lesson 18｜

Why Does Unlock Pressure Affect Coin Prices?

A new friend asked me: “The project’s fundamentals look like they haven’t changed. So why does everyone suddenly get nervous as soon as the token unlocks?”

Because market prices depend not only on whether the project is good, but also on how many coins could potentially be sold at the same time.

A token unlock can be understood as a batch of coins that were temporarily not freely transferable, and at the agreed time they can be transferred or traded. They may belong to the team, early investors, or ecosystem funds, or they may be rewards for participants. Unlocking itself doesn’t mean these coins will all be sold immediately, but it increases the potential sell pressure.

Let’s use an example. A show originally had only 1,000 tickets that could be resold. Later, another 500 tickets simultaneously have their restrictions lifted. The show content doesn’t change, but if suddenly more people want to sell tickets while the number of buyers doesn’t increase in sync, the price is likely to come under pressure.

So when I look at unlocks, I don’t just focus on the three words “there is an unlock.” I care about three questions.

First, how large the unlock amount is relative to the current circulating supply. For the same 10,000,000 tokens, a coin with a large circulating float may see limited impact, while a coin with a very small circulating float could face a clear shock. If you only compare the unlock quantity with the total supply, you often underestimate the pressure right in front of you.

Second, who will receive these coins. Ecosystem funds needed for long-term development, incentives planned to be used according to schedule, and early positions with very low costs may have completely different intentions to sell. You can’t assume they won’t enter the market just because the recipient’s name sounds legitimate.

Finally, whether the market has added demand to absorb the supply. Even if the unlock size isn’t small, if the project’s usage, revenue, or real buy orders grow at the same time, the pressure may be absorbed gradually. Conversely, when demand is weak, even an unlock that isn’t that big on its own could make holders more hesitant to sell.

My judgment boundary is this: an unlock is not necessarily a signal that the price will definitely fall. The market may have already been expecting it, and the recipients may continue to lock up or hold long term. What you really need to be wary of is when circulating supply increases noticeably in a short period, holders’ cost bases differ greatly, and market absorption is relatively weak. Risk only gets amplified when these things stack together.

What in-depth research needs to solve is to break down the vague phrase “unlock is bearish”: how much new liquidity is added, who it belongs to, how it might be used, and whether existing demand can take it in. Project tracking will continue to check whether, after the unlock, the intended use of funds and holders’ behavior deviate from the original logic.

If you’re worried about a specific coin’s unlock, leave a comment with the coin name and the unlock ratio you’ve seen. First figure out how large it is relative to circulating supply, who the recipients are, and whether there’s enough demand to absorb it—then decide whether you should be nervous.