Token Unlocks and Market Cap Traps: How to Avoid Getting Rekt?
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Token Unlocks and Market Cap Traps: How to Avoid Getting Rekt?
Before purchasing any token, please review the unlock schedule and token economics.
Navigating Web3 tides with focused insightsAuthor: Hanzo
Translation: TechFlow
You've been scammed by VCs. Every dump you bought into was a venture capitalist cashing out for massive profits.
If I hadn't seen through their tricks, I would have lost nearly $300,000 in June!
Everyone evaluates tokens solely by price, forgetting about market cap and token unlocks.
This is a mistake.
There are many examples: Arbitrum, Starknet, Zksync, etc.
In mid-December, $ARB was trading around $1.10, with a market cap of $1.3–1.4 billion. Then the price rose above $2, increasing the market cap accordingly. By April to May, the price had dropped back to $1, but Arbitrum's market cap remained at $2.5–3 billion—same as in December!
How did this happen?
As VCs unlocked their tokens, the price rose from $1 to $2.
Venture capitalists started selling, driving the price down—but people thought every dip was a great buying opportunity.
This pushed prices up again, more tokens unlocked, VCs sold, retail bought. That’s how it works.
Supporting a community is a complex task. This is why projects distribute airdrops themselves, manipulate prices, and play games with unlock schedules. Starknet is a perfect example—its price has gradually declined alongside its unlock schedule.
What can we learn from this?
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Before buying any token, check the unlock schedule and tokenomics.
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Examine the market cap (MCap) and its historical trends.
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Analyze and logically assess whether buying a specific token is truly worthwhile.
In today's market, making consistent and substantial profits on regular altcoins is highly risky and difficult. Currently, memecoins are performing far better than standard tokens.
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@DeFi_Hanzo
