Upcoming Investor Token Unlocks: What You Need to Know

The cryptocurrency market is a bated with expectation as some big-name projects get ready to unlock tokens for investors.

For the market, this can be a good or bad thing, depending on the number of unlocked tokens and the market’s condition at the time of unlocking. Two projects in the next week or so are likely to have a significant impact on prices and market stability. Understanding the timing, scale, and potential effect of these unlocks and others like them is crucial for anyone looking to make sense of this volatile new market.

In this analysis, we dissect the largest imminent investor unlocks, looking closely at the size of their emissions, the market risks that come with them, and the possible fallout for market trends—both short- and long-term.

Many projects have important upcoming investor unlocks that are likely to stir the market. Let’s look at the the figures connected to those unlocks and try to divining their possible effects.

– $ETHFI and $ZRO: Both of these projects are set to experience major unlock events within the next year, with $274 million in emissions for $ETHFI and $276 million for ZRO. The near-term nature of these unlocks means that the bulk of investor-held tokens for both projects will likely flood the market in the next 12 months. That has to put downward pressure on prices during that time period if demand isn’t keeping pace.

– $GRASS & $MORPHO: In the case of these projects, the emissions expected from investors will be somewhat more spread out; that is, they will extend over a period of more than one year. $GRASS’s figures show it will have $390 million in emissions, and $MORPHO sees $320 million; so, the total emissions figure here is $710 million. These projects appear to be not quite as bad for immediate market stability as certain others, because they don’t seem to be designed to create a massive amount of pressure to sell just at the outset.

– $REZ and $SPEC: These projects are particularly noteworthy because over 30% of their total supply is allocated to investors, putting them at a higher risk of price volatility once these tokens enter circulation. Due to their high percentage of investor allocation, the incoming tokens could create pretty significant movement. This is especially true for low-FDV (Fully Diluted Valuation) projects like $REZ and $SPEC, which have relatively small valuations compared to the total emissions.

– $BERA & $ZRO: These are two projects, with FDVs (Fully Diluted Valuations) of $3.45 billion for $BERA and $2.3 billion for $ZRO, that have been assigned higher valuations in comparison to the emissions being unlocked by investors. This implies that even though there are going to be sizable unlocks in these projects, the overall impact won’t be as significant on the circulating supply as you might expect. And this was my main point in saying that these projects have low potential for extreme price volatility.

A crucial factor in evaluating the possible market effects of token unlocks is the FDV, or Fully Diluted Valuation, of a project. FDV is the total value of a project when all of its tokens are out in the market. Looking at imminent unlocks, projects with heftier FDVs, like $BERA and $ZRO, seem unlikely to deliver the same sort of volatility one might expect from projects with lower token valuations, like $REZ and $SPEC. The reason? For higher-FDV projects, the incoming unlocked tokens may not noticeably impact the circulating supply relative to the project’s total market value.

Conversely, projects with a low FDV, such as $REZ and $SPEC, may see a more significant effect on price stability. Because a larger part of their supply is locked up with investors and they have lower market caps, the “coming out” of investor-held tokens could swamp the market and cause the price to buckle.P.

When tokens are unlocked is very important for assessing the potential impact on the market. Short-term unlocks, like those associated with $QAI and $ETHFI, could lead to market impact just because of how many tokens will be released and how quickly they’ll get into the hands of traders. These amounts, $QAI especially, are almost certainly going to have a negative price impact. With no buyers stepping up and asking for the tokens that will be unlocked, the prices that are being paid for these tokens might be artificially high.

Conversely, long-term token unlock schedules, like those for $BERA and $EIGEN, which go on for several years (through 2027-2028), are much less likely to cause disruptions. Projects with these more drawn-out unlock schedules will see their token supplies enter circulation at a much slower rate, thus we think they will generate far less pressure on prices. One thing that all these unlocks have in common is they do create some uncertainty, which is never a good thing in the eyes of investors.

The next investor unlocks represent an important step in the life cycle of various projects. Investors need to take a very careful look at not only the scale of these unlock events but also the timing of them. These two factors will tell investors just how much risk is being baked into the projects (at least in the short-to-medium term).

High-FDV projects like BERA and ZRO may be less likely to see huge price swings when we compare their prices before and after the unlocks. Low-FDV projects like REZ and SPEC, on the other hand, may well see their prices bouncing around quite a bit during the same period.

In the next few months, short-term unlocks for projects such as $ETHFI and $QAI might set off some serious market action, while projects like $BERA and $EIGEN will be emitting tokens in the long term and are likely to keep selling pressure in check for a while. At least, that’s what the dynamics of this situation suggest.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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