Token unlock events can present opportunities for investors, but they also come with risks.
The cryptocurrency market is gearing up for a series of significant token unlock events set to occur in June. According to data from Token Unlocks, locked tokens amounting to about $875m will hit the market after the expiration of vesting periods for several top blockchain projects.
Token unlocks happen when previously restricted or vested tokens are released for trading. Vesting mechanisms are designed to keep token holders, particularly early investors, committed and aligned with the project’s long-term success, thereby supporting its overall sustainability and growth.
Notable Token Unlock Details
On June 1, a considerable number of tokens from Sui, dYdX, 1inch, and Ethena will be unlocked, adding fresh liquidity to their circulating supplies. Sui, the high-performance Layer-1 blockchain, will unlock 65.08 million SUI tokens, valued at approximately $66 million.
On the same day, 33.33 million DYDX tokens will enter the market, accounting for 11.91% of the total circulation and valued at approximately $69.67 million. 1Inch, renowned for its DEX aggregator protocol, will unlock 98.7 million tokens while Ethena, the synthetic currency protocol independent of traditional banking, is set to unlock 53.6 million tokens.
Later in the month, other notable blockchain projects like Aptos, Arbitrum, and Starknet will follow suit. On June 12, Aptos will unlock 11.31 million tokens, constituting 2.59% of its total circulation, and valued at nearly $102.92 million. A huge portion of this upcoming unlock is allocated to the Aptos Foundation.
After Arbitrum’s March unlock that released $2.23 billion worth of ARB into circulation, the Ethereum Layer 2 is once again slated to unlock 92.65 million tokens, valued at $105 million, on June 16. The previous unlock caused the price of ARB to plummet more than 50% between March and May, but investors are confident the upcoming unlock won’t dilute the price to that extent.
Starknet, another Ethereum Layer 2, will also unlock 64 million tokens on June 15. This accounts for 5.61% of Starknet’s total circulation and is valued at an estimated $80 million. These tokens will primarily go to early contributors and investors.
Potential Impact on the Market
Token unlock events can present opportunities for investors, but they also come with risks. With large quantities of tokens entering circulation, there may be short-term fluctuations in prices as supply and demand dynamics for these tokens change. The negative sentiment surrounding token unlocks is likely to influence holders to reduce their positions on the tokens in question.
Aside from the tokens in question, the overall cryptocurrency market is likely to experience the effects of the large token unlocks. Short-term effects will depend on whether token holders choose to take up new positions in other tokens or convert their holdings into stablecoins awaiting market stabilization. Investors should be mindful of such possibilities arising from token unlocks.
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