The unlock, scheduled for mid-February, will release 12% of the token’s supply.
Jan 31, 2023 at 12:07 a.m.
Updated Jan 31, 2023, at 12:54 a.m.
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Secure Your Seat
Virtual world The Sandbox’s SAND token is witnessing a surge in price over the month ahead of its token unlock scheduled for Feb. 14.
Token unlocks, which are usually considered bearish events, appear to be having little effect on the price of The Sandbox’s SAND token in the lead-up to releasing more supply. The project will be releasing 12% of the token’s supply, equivalent to around $273 million worth of SAND, to seed and strategic investors, according to Token Unlock, with half of the 12% going to investors, according to a report from Kaiko Research.
SAND is the utility token used on The Sandbox’s ecosystem as the basis for transactions and interactions. Its price has increased 90% since the start of the year and is now trading at 74 cents, according to data from Messari. Notably, however, the token is still 90% down from its all-time high of $8 reached in November 2021.
Token unlocks refer to the process of releasing tokens blocked under the terms of the project’s funding rounds or fundraising efforts. They have often been considered bearish events, given that they release more supply of the asset into the market. However, more recently, unlocks seem to have undergone a change in narrative, with tokens that have upcoming unlocks rallying ahead of them. Rallies in tokens such as Aptos (APT) and axle infinity (AXS) ahead of recent unlocks are two examples.
“The thing to watch with unlocks is [percentage] to investors: if [around] 50% expect heavy sell pressure,” wrote Conor Ryder, a research analyst at Kaiko Research. In a report looking at The Sandbox’s previous token unlocks and price movement, Ryder concluded the token allocation for this upcoming unlock is similar to the August 14 one, so there will be similar underperformance for SAND as sell pressure picks up.
“The day after the unlock on August 14, nearly 75% of all significant trades were sell orders as investors looked to cash out of SAND. That selling pressure continued in the days after the unlock as sell orders dominated buys,” wrote Ryder.
“The allocation of SAND unlocks is skewed towards investors and the token performance has suffered during unlocks as a result,” he added.
The Sandbox has an unlock schedule that is due every six months until 2025 with the same allocation to investors. Therefore, SAND holders could look to face serious headwinds until then, according to Ryder.
Read more about
Sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context. Email addressSign Up
The leader in news and information on cryptocurrency, digital assets, and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase the stock outright in DCG.
Lyllah Ledesma is a CoinDesk Markets reporter currently based in Europe. She holds bitcoin, ether, and small amounts of other crypto assets.
Follow @LedesmaLyllah on Twitter
Learn more about crypto flings, Crypto flings the longest-running and most influential event that brings together all sides of crypto, blockchain, and Web3. Head to cryptoflings.com to register and buy your pass now.