Scheduled Unlocks for LDO, AVAX, YGG Tokens Promise Busy Week Ahead

The Tie's Study Uncovers Coin Price Trends During Token Unlock Phases

A recent examination conducted by The Tie has brought to light an ongoing pattern in which cryptocurrency prices often undergo a dip in the days leading up to token unlock events.

In the upcoming week, the cryptocurrency market is gearing up for scheduled token unlock occurrences, exerting an influence on various tokens, including the liquid staking protocol Lido's (LDO) token, the native token of the Avalanche Blockchain (AVAX), and the token linked with the Yield Guild Games DAO (YGG). These anticipated unlock events are poised to introduce additional tokens into the market, thereby augmenting the overall token supply.

Token unlocks involve the gradual release of tokens that were previously locked, strategically aimed at preventing abrupt sell-offs by early investors and project team members.

Lido DAO (LDO) Token Unlock

Lido's governance token, which plays a pivotal role in the liquid staking platform, is set to unlock 8.5 million LDO tokens on August 26. These tokens hold an estimated value of approximately $14.2 million, making up roughly 0.97% of the total token supply. The entirety of these 8.5 million tokens is intended to be distributed among investors who already hold over 300 million tokens, as data sourced from TokenUnlocks reveals. While Lido's LDO token experienced an 8.5% decline in the past week, its performance demonstrated a level of stability in the last 24 hours, as per Bitsday data.

Avalanche Token (AVAX) Unlock

AVAX, the native cryptocurrency of the Avalanche blockchain, is scheduled to undergo an unlock event on Saturday, August 26. This event will infuse 9.54 million AVAX tokens into circulation, translating to an approximate value of $102.86 million and accounting for around 2.77% of the total circulating supply. A prior unlock event occurred in May and was met with a positive market reception. Lindsey Winder, CEO of token infrastructure firm Hedgey Finance, noted that the impending AVAX unlock has been anticipated for a while, with experienced participants already incorporating it into their trading strategies. AVAX witnessed a 13% decline in value over the previous week based on Bitsday market data, and it also registered a 1.8% decrease in value within a single day. 

Yield Guild Games (YGG) Token Unlock

Yield Guild Games, a significant supporter of GameFi's DAO token, has encountered challenges in gaining mainstream adoption within the blockchain-based gaming sector. YGG's token witnessed a notable drop of nearly 59% over the past year, despite a brief 49% rally in the prior month. In the preceding week, the token sustained an additional loss of 30%, coupled with a 2% decrease in value within a single day. YGG is gearing up to release 12.2 million tokens (equivalent to $2.87 million) on Sunday, constituting 6.6% of the cryptocurrency's circulating supply. Approximately 30% of the token's supply has already been unlocked.  

Token Unlocks and Their Impact on Market Prices

The effects of token unlocks on market prices are multi-faceted. Although commonly perceived as bearish, their influence on market trends is intricate. Analytics firm The Tie meticulously examined over 350,000 unlock events and discovered that, on average, cryptocurrency prices tended to experience a decline prior to the unlocking event. However, instances where the unlocked liquidity exceeded 100% of the average daily trading volume often led to rapid price recoveries, followed by subsequent declines within a two-week timeframe.

This trend underscores the notion that token holders may exercise caution before engaging in selling activities within the market, potentially in response to the initial sense of reassurance stemming from the absence of an overwhelming influx of new tokens.