What Is the Risk of a Large Token Release Coinciding with a Market Downturn?
A large token release (from vesting or lock-up expiry) during a market downturn exacerbates selling pressure. Investors are already fearful and selling, and the sudden influx of new supply from insiders or early investors floods the market, causing a sharp, rapid decline in price.
This timing risk can be catastrophic for the token's value.
Glossar
Large Token Release
Distribution ⎊ Refers to the scheduled event where a significant quantity of previously locked tokens enters the freely tradable supply.
Market Downturn
Correction ⎊ A market downturn within cryptocurrency, options, and derivatives signifies a sustained period of declining prices, typically exceeding 20% from recent peaks, impacting asset valuations and investor sentiment.
Token Release
Distribution ⎊ Token release, within cryptocurrency and derivative markets, signifies the scheduled allocation of digital assets to stakeholders, often following a fundraising event or vesting period.