Cryptocurrencies Sui (SUI) and Hedera (HBAR) have declined over the past day amid scheduled unlocks that will increase their circulating supplies.
SUI has fallen 7% to $0.54, while HBAR is down 4% to $0.05, based on CoinDesk pricing data. The drops come ahead of pre-planned unlocks for both projects occurring this week, which will allow early investors and team members to access tokens that were previously locked up.
Token unlocks are common mechanisms used to control selling pressure on new crypto projects by restricting initial liquidity. Once restrictions lift on a schedule, backers can sell newly unlocked tokens, boosting circulating supply. The news of incoming liquidity often dampens prices.
Sui is unlocking tokens on Thursday as part of its October launch process after raising $450 million from investors in July. The high-profile project started by former Meta developers aims to be a Layer 1 blockchain optimizing for scale and developer experience.
After spiking to $0.85 upon listing in October, SUI has fallen 37% amid broader crypto weakness. This week's unlocks will further increase selling opportunities for insiders.
HBAR will see 3.7 billion tokens unlocked on Friday as originally scheduled in 2018. The total circulating supply will rise to over 15 billion as Hedera aims to distribute its governance token widely. Since launch, it has targeted gradual releases to limit volatility.
The latest unlock moves HBAR closer to its maximum supply of 50 billion. While increasing available liquidity, the scheduled releases also let the market efficiently price in coming inflation.
Planned token unlocks are a normal part of most crypto projects' lifecycles. But the short-term price impact can deter some investors focused on maximizing gains. Yet gradual unlocks may promote more stable growth aligned with platforms' adoption curves. As with monetary policy, managing supply dynamics remains key.
How do token unlocks impact Bitcoin’s inflation rate comparisons?
Bitcoin’s fixed 21 million maximum supply and transparent emission schedule is often contrasted favorably against inflationary fiat currencies. When newer crypto projects like SUI and HBAR rapidly unlock tokens, it underscores this inflationary difference.
Bitcoin’s hard-capped supply and programmatic, predictable release of new BTC into circulation stands apart from assets increasing via more arbitrary or accelerated unlock schedules. This scarcity helps drive Bitcoin’s perception as “digital gold.”
Of course, supporters argue coins like SUI and HBAR need flexible distribution models in their early days to incentivize participation and development. But overtime this flexibility can dilute holdings. Bitcoin’s transparent immunity from such supply shocks strengthens its value proposition.
That said, token unlocks are usually time-limited phases rather than indefinite realities. Once target circulations are achieved, many crypto projects aim to become disinflationary through token burns. This makes comparisons to Bitcoin most relevant during active unlock periods.
Either way, scheduled token releases showcase the differences between Bitcoin’s strictly bounded inflation and newer assets taking more fluid approaches. As time passes, this typically favors Bitcoin’s scarcity.
Should crypto investors change strategies during volatile unlock periods?
For short-term crypto traders, scheduled project unlock periods can present challenges due to price volatility and increased supply. Some may choose to exit positions or adopt defensive postures until selling pressure passes.
However, these dynamics typically offer opportunities for long-term investors comfortable withstanding temporary swings. Planned unlocks are a normal and healthy mechanism to widen token distribution, albeit with mark down risk.
Patient investors can capitalize by accumulating discounted assets despite weak interim technicals. The projects themselves evolve beneficially as broader and more active communities develop around expanded token availability.
Rather than sidestepping scheduled unlocks, savvy investors brace for volatility while evaluating the underlying platform’s adoption and trajectory. Strong fundamentals provide confidence to buy when others waver due to optically unfavorable dynamics.
Of course, not all projects succeed long-term. But for investors who have done due diligence, unlock periods offer an opportunity analogous to buying the dip. Temporary distribution creates chances to gain exposure at advantageous prices.