Original title: "Token Unlocks aren't all cut from the same cloth"
Original Compilation: Kate, Marsbit
Original Compilation: Kate, Marsbit
Note: This article is from @ConorRyder Twitter, and MarsBit organizes it as follows:
Token unlocking is not exactly the same
Note that $AXS and $SAND are pumped before unlocking, outperforming $ETH by 50% and 45%
Unlocking is considered a bearish catalyst so I looked at the data to find out why some are more bearish than others
If token unlocking is bearish, what can we expect from prices like $AXS and $SAND after this rally?
Fortunately, both tokens were unlocked last year, so we can see how they perform on ETH
not too good
Transaction-level data reveals more interesting insights
Last year $AXS unlocked 8% of the capped supply, about a quarter of which went to early investors
Leads to selling pressure on the day of unlocking, which balances out a few days later
This is in stark contrast to the unlock on January 23rd, when only 1.8% of the supply was released
Importantly, none of this was allocated to early investors - it was all allocated to stakeholders
The difference is very large, there is a lot of buying than selling on the unlock day and after
Thus, a 25% allocation caused selling pressure on investors on unlock day, but balanced out afterwards
What about the 50%?
$SAND Unlocked in August Released 12% of Supply, Half of It Goes to Investors
Leading to intense selling pressure that lasted for several days
Now $SAND faces it all again on Feb 14th, 12% of supply was released, half of which went to investors
Strong selling pressure is expected, especially after the token’s recent rally
If that's not enough to prove that a 50% allocation to investors is a recipe for disaster, here's another example:
Last November, $IMX released 18% of the total supply, 50% of which went to investors
Also, in the days after unlocking, a large number of sell orders again exceeded buy orders
Now it's $DYDX, which is delaying unlocking until December
This will be a huge unlock, with 15% of the total supply being released and, you guessed it, half going to investors.
Once the news broke, shares jumped 20% and open interest increased by 50%
After looking at the liquidity data of CEX, I am sure $DYDX will see huge volatility
It has a lower depth than $AXS and $SAND, which means fewer orders are needed for price changes
Since 50% went to investors and there is very little liquidity, the dydx team may know that Token will be affected
So, what about $AXS, $DYDX, $SAND and other unlocks?
- Few investor unlocks in $AXS so the rally may have support
- $SAND has a huge 50% unlocked for investors
- $DYDX has no short-term headwinds, probably planning a v4 release in December to overwhelm unlocking
All in all, I would say that for investors, the unlocking needs to focus on: if ~50%, expect heavy selling pressure
Shout out to @Token_Unlocks and @UnlocksCalendar for unlocking this research
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