By Stacy Muur
Compiled by: TechFlow
A few weeks ago, Messari released their in-depth report, “Don’t Bow: Market Strategies for Unlocked,” which analyzes the impact of increased circulating supply on the market.
This article summarizes the main findings of their study and provides background information and recommendations for tracking unlock events.
Messari’s report: Key highlights
Messari analysts analyzed data from 619 unlocking events across 41 assets to identify patterns in how the market reacts to increases in circulating supply. Most events involved increases in circulating supply of less than 2.5%, while fewer than half exceeded 5%.
Data source: Token Unlocks, data as of September 16
Crypto tokens rarely trade in isolation, and their prices are influenced by factors such as market sentiment, new product launches, and changing narratives. While token unlocks generally have a negative impact on token prices relative to BTC, this is not always the case.
However, there are some trends worth noting:
Unlocking at least 5% of the circulating supply tends to significantly impact a token’s performance;
Tokens generally perform worse in the seven days before and after an unlocking event;
New product launches, industry outperformance, and other catalysts can influence typical behavior around unlock dates;
The highly anticipated large-scale unlocking may trigger unexpected market reactions;
With a large number of tokens unlocked each month, it will be difficult to outperform other altcoins in the long run;
Tracking unlock events
When tracking unlocks, I often use the Messari dashboard, but other notable unlock tracking tools include Token Unlocks and DefiLlama.
On Messari, the most important upcoming unlocks include:
$ONDO: 268% supply increase in 3 months;
$OMNI: 154% supply increase in 7 months;
$PRCL: 121% supply increase in 7 months;
$JITO: 108% supply increase in 2.5 months;
$TNSR: 96% supply increase in 7 months;
$TIA: 83% supply increase in 1.5 months;
$PYTH: 58% supply increase in 8 months;
$PORTAL: Supply increased by 15.7% in 2 weeks;
$MAV: 14.5% supply increase in 3 weeks;
$ZETA: 11% supply increase in 2 weeks;
DeFiLlama provides the following data:
$BIGTIME: 61% supply increase in 3 weeks;
$CYBER: Supply increased by 69% in 1 month;
$HOLD: Supply increased by 38% in 2 months;
$LVL: 19% supply increase in 3 months;
$BB: 100% supply increase in 7 months;
Monitoring inflation
Another important metric is the daily token issuance and issuance rate change. Messari is again a great help in this regard, and their daily linear issuance rate maximum change dashboard is very useful.
Important events that will cause inflation to increase:
$TIA will start to be issued in 1.5 months;
$JITO will increase daily issuance 8x in 3 months;
$DYM will increase daily issuance 3.8x in 4.5 months;
Important events that will lead to lower inflation:
UNI will stop new issuance this week, the same as RON and $XVS (which will stop new issuance next week);
$WOO will reduce issuance by 75% in 1.5 months;
$NEAR will reduce issuance by 38% in 1 month;
According to Token Unlocks, the first week of November will see the highest new issuance, with $1.4 billion expected to flow into the market.
Summarize
Token unlocking is one of many factors to consider when making an investment or trading decision. Other important factors include new product launches, overall market sentiment, and liquidity. Usually, when an unlocking event occurs, its impact is already reflected in the market price, so shorting tokens on the unlocking date is not a reliable strategy.
The impact is most significant when the unlock size exceeds 5% to 10% of the circulating supply and there are no upcoming catalysts or low interest in the token.
