What is Token unlock? A guide for smart traders

Question

Token unlock simply refers to when a project releases the locked tokens into the market according to the schedule they promised beforehand. These tokens belong to the powerful people - the project team, wealthy VCs, paper advisors, and the community that trusts the project.

Token locking projects are not because they are kind - it's simply to prevent sharks from dumping their holdings and running away, causing the price to plummet. Locking tokens also helps them create an appearance of reliability and long-term commitment to the project.

Why should we care about unlock?

When a flood of tokens enters the market, the selling pressure can be immense. Those who bought at a low price initially are often eager to take profits, especially when the token has increased by tens or hundreds of times. If there isn't enough strong buying power, the price will collapse quickly.

The market psychology is also very fragile. Many traders panic-sell even before the unlock occurs, creating a domino effect. And when the amount of tokens being unlocked is too much compared to the current total supply, a real disaster happens.

Real-life examples:

TRUMP coin - When 40 million tokens (20% of the total supply) were unlocked on April 18, many thought the price would crash. But then suddenly, the price increased by 60% after the news that 220 people holding the most TRUMP would be invited to a party with Mr. Trump. Who would have thought?

Aptos (APT) - This is interesting. All three unlock events occurred in a strange scenario: the price hit bottom and then suddenly rose before the unlock, peaked on the unlock day, and then... crashed. It feels as if an invisible hand is manipulating the market, creating a false sense of positivity so that insiders can unload their assets at a good price.

How to avoid being caught as prey?

There are some good tools to track the unlock schedule:

Tokenomist with an attractive interface, detailing each unlock phase
DeFiLlama aggregates information on upcoming token vesting
Follow announcements from the project itself on X, Discord

Don't panic just because an unlock is coming up. You need to analyze carefully: who will receive the tokens? Do they have the motive to sell? Is there any positive news accompanying it?

I have seen many traders lose money by panic selling before the unlock, only to watch the price soar afterward. And there are also those who buy in before the unlock because they believe in "buy the rumor, sell the news" but then get crushed when the Token declines.

Stay alert. Token unlock can be a great opportunity if you read the market well, but it can also be a deadly trap if you act blindly.