The unlock periods are the most sensitive parts of tokenomics as they have a direct impact on the supply and the " sell pressure " on a coin in circulation. As a fundamental law of economic science, if the supply of an asset increases more than the demand for it, the price tends to go lower. Thus, the veteran coins suffer from the supply shock as the unlock times get closer.
The old coin dilemma pushes crypto investors to allocate less money for the coins that had a bull market and increased parabolically as the coin, now, has thousands of holders who are waiting for the break - even points to dump on the market. For that reason, the core teams or foundations behind the project try to create a narrative for the coins.
Bearish token unlocks are now a thing of the past as astute traders attempt to squeeze short positions in the lead up to supply increases.
As Coindesk News mentioned, the bullish unlocks are nothing surprising in the ecosystem. Actually, the whales do not want to minimize their risk by letting everyone win with them in their market actions. Rather, they want to hunt down the weak hands or the people who have less knowledge in the market in terms of leveraging the risks.
Also, according to the news by Coindesk, the bullish unlock happened for Axie Infinity, dYdX, and Aptos earlier. The growing number of long positions will be a great opportunity to hunt them together. Unless the crypto market or the global markets get into a turbulence, expecting a massive dump on ARB and APTOS may not end as what they expect to see.
Whales Always Hunt
Here is a real example that took place today. Since there was a nice amount of money in the long positions, the whales wanted to clear the longs by liquidating them in a drop that exceeded their liquidation prices. As a result, those who were bullish on Arbitrum have lost some of their funds in case Arbitrum goes up.
This case is not crypto - specific, and it will always happen in the markets. If you see a 100% possibility to make gains, most probably some parties will not let it happen. The only free cheese is in the mousetrap.
The maximum risk one can take is that the hedge shorts or longs that do not exceed the valuation of your portfolio can be a profitable option. For example, if you are holding 1000 ARB and you think that the price may go down, rather than selling your coins, you may open a short position to hedge your possible loses.
- If ARB goes down, you make a profit from the trade but the token loses money = Zero Sum
- If ARB goes up, you neither lose nor earn money as you had a hedge short that loses value = Zero Sum
This is a strategy that you may apply. The only loss is the funding rate that is paid by longs or shorts according to the market dynamics.
What do you think about the upcoming unlocks?
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