What is token unlocking? Key supply events affecting prices--analysis of real cases this month

What is token unlocking? In one sentence

During the week of July, the three most significant reports all pointed to the same mechanism: Arbitrum released 92 million tokens, with little market volatility;Hyperliquid began to fall three weeks before its release date; and Ondo rose 17%, although its release in 2027 is far ahead of both. This mechanism is token unlocking, which is the most easily misunderstood cyclical event in the cryptocurrency field. This guide will explain what unlocks are, why some unlocks destroy price and others have no impact, and how to interpret the next wave of unlocks you encounter.

Token unlocking refers to releasing previously restricted tokens as planned, allowing them to enter potential circulation markets. When cryptocurrency projects are launched, they almost never release all tokens at once; most of them are locked in accordance with an unlocking schedule, a phased release designed to keep the team committed and prevent early investors from selling the project the first day it goes online. Unlocking is just a scheduled date on the timetable. These tokens have always existed, but what has changed is that now someone can sell them.

Why does unlocking exist?

The ownership schedule is a commitment maintenance mechanism that draws on start-up equity. A project that raises funds from venture funds and pays teams in tokens requires these participants to maintain long-term consistency for years, not weeks, so their token allocations are gradually released: usually a waiting period, followed by phased allocations. The alternative-fully circulating when the project goes online-was widely tried in the early cycle, but produced a downward chart trend. The attribution timetable does not prevent this outcome; it simply plans it, distributes it, and makes it public, which is crucial.

Cliff unlocking and linear unlocking: Two forms of unlocking

Cliff unlocking releases a large number of tokens on a single date. They are the dramatic category: a one-time expansion of supply, everyone can see the fear that the date is approaching and the market will price in advance. The largest cliff unlock currently belongs to Ondo: According to publicly available ownership schedule data, approximately 1.94 billion ONDO units (approximately 19.4% of total supply) are scheduled to be unlocked on January 18, 2027, a date that is a prominent asterisk in all long-term ONDO investment arguments.

Linear unlocking is the continuous or monthly release of tokens. A single incident is less dramatic, but it creates a permanent background pressure: liquidity grows monthly, so demand must grow for prices to remain the same. Arbitrum's monthly periodic unlocks (lasting until 2027) are a textbook case and an important reason why ARB prices have continued to fall for two years, even as its network thrives.

Why does unlocking affect prices, and why does it sometimes not?

Unlocking will not change anything on a mechanical level until someone sells it. Its price impact is transmitted through three channels, and its combination determines the final result.

Channel 1: Who gets the tokens.

This is the most critical issue, and it is often ignored by news headlines. Tokens released to early investors and team members have a tendency to sell; funds have return goals and employees have living needs, and history shows that some of these unlocked tokens will quickly flow to exchanges. Tokens released to the DAO treasury were simply transferred to the treasury; no one would sell on the market that afternoon. July provided a perfectly controlled experiment: Arbitrum's July 16 unlock sent approximately 92 million ARBs to its DAO treasury with little immediate selling pressure; while a similar unlock in 2024 (for teams and investors) triggered a price decline. Same token, same quantity, different label, different result.

Channel 2: Scale is relative to reality.

Two ratios are important: the proportion of unlocked volume to circulating supply, and its dollar value relative to daily trading volume. A release of only 1% of liquidity can be absorbed in a liquid market; the same proportion in a weak order book is a supply wall that buying cannot swallow. The value of the dollar also changes with the price itself: the unlocking of approximately 92 million tokens in Arbitrum, which were worth $92 million when the ARB transaction price was above $1, are now worth only about $8 million, which is why the same event has gone from affecting the market to being a negligible error.

Channel 3: Expectations.

Markets don't wait for supply to arrive; they react in advance. Hyperliquid is a living example: approximately 9.92 million HYPE (worth approximately US$618 million) will be unlocked to core contributors on August 6. The token has continued to fall several weeks early, and holders sell it first and then ask why. That's why "unlocking happened, but nothing crashed" situations are common: fears have been sold out before, and unlocking days sometimes mark a local bottom. Sometimes. This is a tendency, not a law.

How to interpret any unlocking through five questions

Ask these questions in order: Who gets the token: Insiders, Treasury or Ecological Fund? What is the proportion of unlocked volume to circulating supply, and what is its dollar value relative to daily trading volume? Is it a single cliff unlock or a monthly continuous release? How did the token's price perform before and after it was unlocked? Have markets had months of visible warnings, meaning fear may already be reflected in prices? Five answers turn a scary title into a practical assessment. But there is always a warning: unlocking is a supply analysis, not a trading system; those illiquid and suppressed tokens may fall based on unlocking news alone, regardless of the mechanism.

Another thing that unlocking can explain: a sudden surge in market value

When the market value of a token grows much faster than its price, the usual culprit is that the circulation supply is revised upwards, sometimes because the data provider recognizes the unlocking. This problem arose in DeXe this month, with its implied liquidity seemingly doubling in a week, and the answer to this question-whether it is a data correction or an actual release-determines the entire long-short balance. Whenever there is a deviation between market value and price, check supply first.

Where to view the unlocking schedule

The most reliable sources are always the project's own documents and foundation disclosures, which are used to verify allocation data. Aggregators such as Tokenomist, DefiLlama's unlock page and DropsTab track the schedules of hundreds of tokens and are useful radars, but be aware that third-party attribution data can sometimes lag or be mislabeled; treat them as maps, while official documents as territory.

Summary

Token unlocking is when the planned supply meets the demand that exists that day. The word itself tells you almost nothing; the label on the token, the size relative to the volume in circulation, and the expectations for the months before unlocking tell you almost everything. The July 2026 market provides a complete lesson in one week: a treasury unlock landed smoothly, an insider unlock cast a three-week shadow, and a 2027 cliff unlock quietly dominated the entire long-term prospects of a token. Read labels, calculate ratios, and respect early responses. This is the whole technique.

This article is for reference only and does not constitute investment advice. Cryptographic assets fluctuate very much and you may lose all your principal. Please be sure to study it yourself.