Token unlocks trigger price fluctuations? Analyzing market response patterns from the Messari report
Token unlocks have attracted the attention of many traders who hope to capitalize on the volatility caused by increased selling pressure.
A few weeks ago, Messari published an in-depth report titled "Don't Look Down: Navigating Markets Around Cliff Unlocks," which examines the impact of increased circulating supply on the market.
This article highlights the key points of the report and provides additional background information and recommendations for tracking unlock events.
Messari Report: Key Highlights
Messari analysts studied data from 619 unlock events across 41 assets to determine the market's reaction patterns to increases in circulating supply. Most unlock amounts are less than 2.5% of the circulating supply, while unlock events exceeding 5% of the circulating supply account for less than half of all events.
Data Source: Token Unlocks, as of September 16
Tokens rarely trade in isolation; their prices are influenced by market sentiment, new product launches, and narrative changes. Although token unlocks typically have a negative impact on the token's price relative to BTC, this is not always the case.
Nevertheless, certain patterns are worth noting:
Unlocks of at least 5% of the circulating supply tend to have a significant impact on token performance.
Poor token performance typically occurs within seven days before and after unlock events.
New product launches, strong industry performance, and other catalysts may override typical behavior around unlock dates.
Highly anticipated large-scale unlocks can trigger unexpected market reactions.
In the long term, tokens with larger monthly unlock amounts struggle to outperform other altcoins.
Tracking Cliff Unlocks
For tracking unlocks, I usually use the Messari dashboard. However, other notable unlock trackers include Token Unlocks and DefiLlama.
On Messari, the most significant upcoming unlocks include:
$ONDO: 268% increase in supply over 3 months
$OMNI: 154% increase in supply over 7 months
$PRCL: 121% increase in supply over 7 months
$JITO: 108% increase in supply over 2.5 months
$TNSR: 96% increase in supply over 7 months
$TIA: 83% increase in supply over 1.5 months
$PYTH: 58% increase in supply over 8 months
$PORTAL: 15.7% increase in supply over 2 weeks
$MAV: 14.5% increase in supply over 3 weeks
$ZETA: 11% increase in supply over 2 weeks
DeFillama supplemented this data:
$BIGTIME: 61% increase in supply over 3 weeks
$CYBER: 69% increase in supply over 1 month
$HOLD: 38% increase in supply over 2 months
$LVL: 19% increase in supply over 3 months
$BB: 100% increase in supply over 7 months
Tracking Inflation
Another important metric to track is the daily token issuance and interest rate changes. In this regard, Messari proves to be very useful, with its daily linear interest rate change percentage being the highest.
Significant events that will exacerbate inflation:
$TIA will begin releasing in 1.5 months
$JITO will increase daily release amount by 8 times in 3 months
$DYM's daily release amount will increase by 3.8 times in 4.5 months
Notable events that will reduce inflation:
$UNI will stop new releases this week, similar to $RON and $XVS (next week).
$WOO plans to reduce release amount by 75% in 1.5 months
$NEAR will reduce release amount by 38% in 1 month
According to data from Token Unlocks, the first week of November will see the highest new issuance amount, with $1.4 billion entering the market.
Summary
Token unlocks are one of many factors to consider when making investment or trading decisions. Other important factors include new product launches, overall market sentiment, and overall liquidity. Typically, the impact of unlocks is already priced in by the time the event occurs, making it an unreliable strategy to short tokens on the unlock date.
A significant impact on price is observed when the scale of unlocks exceeds 5-10% of the circulating supply and there are no upcoming positive catalysts.
