MANTA, DYDX, AVAX, ID, IMX: Five token unlocks to look out for next week

• Manta Network, dYdX, Avalanche, Space ID, and ImmutableX will unleash millions of dollars worth of tokens into their circulating supply next week.
• While IMX will be holding a linear unlock, MANTA, DYDX, AVAX, and ID will have cliff unlocks.
• Investors should brace for volatility to avoid exit liquidity as unlocks are generally considered bearish catalysts.

Multiple ecosystems have their unlock events lined up for next week, starting Sunday, February 18. Millions of dollars worth of tokens will be unleashed into the market, increasing the individual circulating supplies of the projects. Volatility should be expected with investors looking to trade around the events.

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Five token unlocks to look out for next week

The Manta Network will release 6.67 million MANTA tokens to the market on Sunday in a cliff unlock event. These tokens, worth $19.80 million at current rates, will comprise 3.14% of the network’s circulating supply.

Fast forward to two days later, on Tuesday, February 20, the dYdX ecosystem will unlock 575,340 DYDX tokens to the market, comprising 0.72% of the circulating supply and worth $1.83 million at current rates. This will also be a cliff unlock.

The Avalanche network will unlock 10.24 million AVAX tokens to the market on Thursday, February 22, in a cliff token unlock event. That many tokens are worth $394.55 million at current rates and constitute 2.79% of the project’s circulating supply.

There will be another cliff token unlock event on the same day, where the Space ID ecosystem will free 18.49 million ID tokens to the market worth $10.88 million at current rates, comprising 4.29% of the project’s circulating supply.

On Friday, the ImmutableX network will see 8.55 million IMX tokens flood markets in a linear unlock event, comprising 0.63% of the gaming project’s circulating supply. This number of tokens is currently worth $26.84 million.

Difference between cliff and linear unlocks

In cliff token unlocks events, the tokens have been set to unlock on a schedule that is more periodic than daily, and not the traditional weekly, monthly or yearly periodicals.

For linear unlocks, the tokens are paid out on a linear schedule, say monthly or yearly, thus delivering some level of price stability.

Possible scenarios around token unlock events

The idea of more tokens coming into the market is typically bearish as it increases the circulating supply.

With the current bullish outlook in the market, crypto holders scrutinize all metrics to establish how to make a profit from different projects. Token unlocks could provide an opportunity for perpetual traders to long or short the tokens.

The unlocks could spark rallies in the price of the assets, because in certain instances token demand increases, causing buyers to gobble up the tokens during token unlock periods. In this case, an expected token unlock could bolster confidence among the market players, as it leads to liquidity increase and, therefore, works as a demonstration of project longevity.

For a bear market situation, however, token unlocks tend to reduce token value. Ahead of the unlocks, investors start shorting the asset due to a combination of growing supply and plummeting demand. This leads to a price slump.

It is also possible that a token’s price is not affected during token unlocks particularly when the number of tokens set for unlocking is not enough to disturb the circulating supply of the project. Another possible reason for such an outcome is that the event was already priced in.