The evolution of digital asset markets has brought the concepts of token economics to the heart of every professional investment analysis. According to observations from the team of experts at Tan Phat Digital, the token release event (token unlock) is considered one of the most important variables, directly adjusting supply and demand dynamics, and reshaping market psychology in the short and medium term. The essence of a token release is the process by which cryptocurrency units that have been locked up under previous contractual terms—usually intended to secure the commitment of the development team, early investors, and strategic partners—are officially released into free circulation in the market.

Empirical research based on data from thousands of release events reveals an undeniable fact: the majority of large-scale unlocks create significant downward price pressure due to supply shock and defensive psychology of existing investors. However, to answer the question "usually prices fall or rise", one needs a multidimensional view that goes beyond the basic laws of economics, including analysis of the behavior of participating entities, the technical structure of the vesting contract, and the liquidity landscape of the market at the time of execution.

Theoretical basis and operating mechanism of Token Unlock

To understand why token release is so influential So, first of all it is necessary to consider the origin and purpose of locking tokens. When a cryptocurrency project launches a fundraising round, it typically sets a maximum total supply. However, not all of these quantities are available immediately. A large portion is reserved for the founding team, advisors, venture capital funds and ecosystem development funds.

The lock-up and vesting mechanism is designed to prevent pumping and dumping immediately after listing, while forcing stakeholders to stick with the long-term development of the project. Unlocking is usually done through automated smart contracts, ensuring transparency and irreversibility.

Token release models in detail

The impact of a token release event depends greatly on its structure. Developers and economic experts at Tan Phat Digital classify these models as follows:

Cliff Unlock: A large number of tokens are unlocked at the same time after a waiting period (cliff period). For example, 20% of tokens are unlocked after 12 months. This model often causes extreme volatility and sudden selling pressure, and is the model most feared by the market due to the risk of high price dumping.
Linear Unlock:Tokens are released gradually in blocks, days or months over a long period of time. This creates constant but trickle selling pressure, making it easier for the market to absorb. However, if demand is weak, the price may decrease over time.
Graded Vesting: The percentage of tokens unlocked increases over time (e.g. first year 10%, second year 30%). This model creates growth expectations; Initial selling pressure is low but will gradually increase as the project matures.
Event-Based Unlock: Tokens are only unlocked when the project reaches a specific milestone such as Mainnet launch or target transaction volume. Often accompanied by positive news, helping to offset selling pressure from new supply.

The difference between on-chain vesting and off-chain vesting is also important. On-chain vesting uses smart contracts that allow the community to accurately track, while off-chain vesting is more flexible for businesses but lacks transparency.

See more: What is Token Unlock, What is Vesting What

Analyzing the Impact of Token Unlock on Price Movements

While economic theory indicates that increased supply will reduce prices, actual data shows a more nuanced picture.

Why do prices often fall?

The direct cause is the increase in circulating supply. If purchasing demand does not grow accordingly, the value of each token will be diluted. Actual reports show that about 90% of clearances create negative price pressure. This pressure also comes from the front-running mentality of retail traders to avoid losses, creating a "self-fulfilling curse".

Analyzing price movements by time frame

30 days before the event: Prices often begin a steady downward trend as large investors begin to implement defensive strategies.
7 days pre-event:The downward pressure on prices increases sharply as the community begins to react negatively to the unlock schedule.
Day of the event: Volatility reaches its peak. If the amount unlocked is large (over 1% of circulating supply), the price can drop rapidly within a few hours.
14 days after the event:Price tends to stabilize and return to neutral levels once the market has absorbed the excess supply.

Amount of impact based on token recipient

Project team (Team): This is the group with the most negative impact. They often consider tokens as income and have a high need for liquidation. Prices typically drop about 25% on average during these unlocks.
Early investors (VCs/Investors): Moderate negative impact. Although capital costs are very low, these organizations often use professional financial strategies such as OTC trading to minimize the impact on prices.
Ecosystem/Community Fund: Can be positive (average +1.18%). Tokens are often used for staking or liquidity rewards, helping to increase network activity instead of being sold off immediately.

Exceptions: When does the price increase after release?

In some scenarios, token release becomes a bullish signal. If the unlock occurs at the same time as breakthrough news or in the context of a bull market, demand can completely absorb the new supply. In addition, increasing liquidity helps reduce price slippage, attracting large traders to participate.

Typical Case Study 2024-2026

Plume Network (PLUME): On April 21, 2025, the project released more than 17 million USD worth of tokens. Although the price dropped before, after unlocking the price increased by 9.4% thanks to new staking programs that boosted holding demand.
Arbitrum (ARB): The huge unlock of 1.11 billion tokens in March 2024 caused the price to decline by 33.8% in the following 30 days due to its large scale and lack of incentives. demand.
Bitget Token (BGB): On January 26, 2026, approximately 140 million BGB worth more than 500 million USD were released, creating extreme supply pressure on the project's current token burning mechanism.

See more: What is Tokenomics? Analyzing the importance of Tokenomics in Blockchain 2025

Market context 2024-2026: The "Low Float - High FDV" problem

An alarming trend is the "Low Circulation - High Dilution Pricing" model. Many projects only bring to the market 5-10% of total supply, making it easy for prices to rise in the early stages due to artificial scarcity. However, it is estimated that about 155 billion USD in token value will be released from 2024 to 2030, 82 billion USD in 2024 alone.

Key projects to watch (2025-2026)

Recall (RECALL): Very low circulation rate, FDV about 536 million USD. Huge potential selling pressure from private rounds when vesting begins.
Yieldbasis (YB): FDV 472 million USD, guaranteed by the reputation of the Curve team but need to closely monitor the unlocking schedule of early investors.
Celestia (TIA): After a 25% decline at the end of 2024, TIA is entering a period of periodic release for the team and investors in 2025-2026.
Aptos (APT): This project continues to have important periodic unlocks in early 2026, directly affecting the fee structure and interest from financial institutions.

Risk Management and Trading Strategy

Tan Phat Digital recommends investors apply the following strategic framework to optimize positions So:

Professional Preparation Steps

Follow the schedule: Use platforms like Tokenomist to understand the exact date, time and scale of the release.
On-chain analytics: Use Arkham Intelligence to track team and VCs wallets. The signal of a token moving to the exchange early is a sign of a sell-off.
Observe Funding Rates: If the margin rate is deeply negative, the market is betting big on a price drop, which can create a short squeeze phenomenon.

Phase Action Roadmap

Pre-Unlock Phase (T-30 to T-7): Should exit positions or perform hedging. The goal is to avoid a price shock due to other investors selling first to preserve capital.
Close to Unlock Phase (T-7 to T-0): Short-selling orders can be considered to take advantage of selling pressure from early investors, but be wary of unexpected positive news.
Post-Unlock Phase (T+14 onwards): Here is a good time to buy accumulation when the price has stabilized and hedging orders have been removed.

The importance of future Vesting infrastructure

In the period 2025-2026, the market is transforming to a "Performance-based vesting" model (performance-based release). Tokens are only unlocked when the project achieves realistic revenue or user base goals, helping to align developer interests with long-term success. In addition, AI algorithms are also starting to be applied to automatically adjust the unlocking speed based on the actual market liquidity, providing better protection for retail investors.

10 Typical Case Studies on the impact of Token Unlock (2023-2026)

Below are 10 real-life examples compiled by Tan Phat Digital to help investors Get a clear picture of price fluctuations around token releases:

Arbitrum (ARB) - March 2024: Unlock 1.11 billion tokens (accounting for 87% of circulating supply). This is one of the largest Cliff Unlocks in history. Result: ARB price dropped continuously before the event and dropped another 33.8% in the 30 days after due to too much supply pressure.
Celestia (TIA) - October 2024: Released 977 million USD in token value. TIA price reduced by 25% for 20 days after the first unlock. However, thanks to the strong community, the price recovered and surpassed Bitcoin by 19.2% after 30 days.
Sui (SUI) - May 2024: Freeing 1.21 billion USD. Before the 30-day event, the price increased by 39.6% due to speculation, but decreased by 20.3% in the 30 days after unlocking.
dYdX (DYDX) - December 2023: Unlocked 150 million tokens (15% of total supply). This event was postponed from January 2023, causing the price to increase by 25% at that time. However, when officially unlocked in December, the price began a steady downward trend despite the general market excitement.
Plume Network (PLUME) - April 2025: Unlocked 108 million tokens (worth 17.82 million USD). Although the price dropped 6% in the week before the unlock, it increased 9.4% in the 24 hours after the event thanks to the launch of new staking programs to attract holders.
Official Trump (TRUMP) - March 2025: Unlock 20% team allocation. Within 48 hours after the token was released, TRUMP price dropped nearly 18%, showing strong internal profit-taking pressure.
Ethena (ENA) - May 2025: Release of 171.88 million tokens (3.1% of circulating supply). This event directly caused ENA's price to drop 17% within just one week.
AltLayer (ALT) - April 2025: Release 20% of total supply in a single day. The token price went through a period of strong correction for 3 consecutive days immediately after the event.
Scroll (SCR) - April 2025: Unlocking a large number of tokens amid the weakening Layer-2 trend. As a result, prices fell 14% in the 7 days leading up to the event due to lack of liquidity and demand.
Ondo Finance (ONDO) - January 2025: A massive unlock of 1.94 billion tokens (accounting for more than 130% of the existing circulating supply at that time). This event created a supply shock and caused huge fluctuations in the ONDO market.

Frequently Asked Questions about Token Unlock

Below is a collection of the most common questions from the investor community compiled by the Tan Phat Digital team based on actual data:

1. What really is token unlock? This is an event that unlocks tokens that were temporarily locked or restricted from trading according to Tokenomics regulations when the project launched. Once unlocked, these tokens become available to buy, sell or trade freely on the market.

2. Why do token prices often drop sharply even before the unlock date? This phenomenon is mainly due to the "front-running" mentality. Traders anticipate upcoming selling pressure and choose to sell early to avoid losses. In addition, large investors often start implementing hedging strategies 30 days before the event to lock in profits.

3. What scale of unlocking is considered "dangerous"? If the amount of tokens unlocked exceeds 1% or especially over 5% of the current total circulating supply, the event is considered a "giant unlock" and requires extreme vigilance because of the potential for extreme selling pressure.

4. What is the main difference between Cliff Unlock and Linear Unlock? Cliff Unlock is unlocking a large amount at once after a waiting period, often causing supply shock and strong fluctuations. Linear Unlock is a gradual release on a schedule (day or month), making the market more stable and predictable.

5. Which group of subjects receiving tokens often exerts the greatest pressure on selling? The project team (Team) and early investors (Private Investors) are the groups with the highest selling risk because their cost of capital is often very low. In contrast, tokens for community or ecosystem funds are often used for staking or development, and are rarely sold off immediately.

6. Is it possible that the price will increase despite the unlock?Yes. If the project has extremely good news (like a major partner, new staking launch) or the general market (Bitcoin) is in a strong uptrend, buying power can absorb all the new supply. For example, PLUME increased by 9.4% after unlocking thanks to an attractive staking program.

7. Why are "Low Float - High FDV" projects risky in 2026? Because these projects have very low initial circulating supply, creating artificial scarcity to push up prices. When major unlocks begin in 2026, the massive supply overflow will become "liquidity exits" for internal investors, causing sustained downward pressure on prices.

8. What should I do if I hold a token that is about to have a big unlock? A safe strategy is to reduce exposure (exit positions) 7-30 days before the event. You can switch to stablecoins or Bitcoin to preserve capital and wait for the market to absorb all the new supply before returning.

9. What is the "golden" time to buy back tokens after unlocking?Historical data shows that prices usually stabilize and volatility decreases approximately 14 days after the unlock event. This is when the hedging strategies have been unwinded and the initial selling pressure has exhausted itself.

10. How to recognize that the unlocking news has been "priced in"? Investors can monitor Funding Rates (margin rate). If the Funding Rate is deeply negative before the unlock date, it proves that the market is ready for a bearish scenario. In addition, monitoring large wallets on Arkham if you see that they have transferred tokens to the exchange early is also a sign that the news has been reflected.

The token release is a landmark event. While the general trend is downward, the ultimate impact depends on the unlock size (especially when above 5% of circulating supply), recipient profile, and vesting structure. The final advice is to always do independent research, keep a close eye on on-chain data, and never participate in projects that have too high a dilution ratio and lack an actual product. In the new era of the market, knowledge of release schedules is the most important shield to protect your profits.