What Is Token Unlock?
A token unlock is a scheduled event where previously locked tokens (allocated to team members, investors, advisors, or the ecosystem fund) become freely tradeable. Vesting schedules typically include a cliff period (6-12 months of no unlocks) followed by gradual monthly or quarterly releases over 2-4 years.
How Token Unlock Works
Large token unlocks effectively increase the circulating supply overnight, often creating significant sell pressure. When 10% of a token's circulating supply unlocks simultaneously and goes to early investors who bought at 1/100th of the current price, the incentive to sell is overwhelming. The market usually prices in expected unlocks, but the magnitude of actual selling can still surprise.
Why It Matters for Traders
Tracking token unlock schedules is essential for timing entries and exits. Large unlocks within the next 30 days are a risk factor — consider delaying entry or reducing position size. Conversely, tokens that have completed most of their unlock schedule (fully diluted value close to market cap) have less overhead supply to worry about. Tools like Token Unlocks and CryptoRank provide real-time unlock calendars.