Virtual world The Sandbox's SAND token has seen a price surge in the month ahead of its planned February 14 unlock.
Token unlocks are generally considered a bearish event and appear to have little effect on The Sandbox’s SAND token price until more supply is released. According to a report by Kaiko Research, according to Token Unlock, the project will release 12% of the token supply to seed and strategic investors, equivalent to approximately $273 million worth of SAND, half of which will be available for investment By.
SAND is the utility token used in The Sandbox ecosystem as the basis for transactions and interactions. Its price has risen 90 percent since the beginning of the year and is currently trading at 74 cents, according to Messari data. But it’s worth noting that the token is still 90% below its all-time high of $8 set in November 2021.
Token unlocking refers to the process of releasing tokens that were locked under the terms of a project’s funding round or fundraising campaign. They are generally considered bearish events because they release more supply of the asset into the market. More recently, however, the unlocks seem to have changed, with the soon-to-be-unlocked coins bouncing ahead of them. The rally in tokens like Aptos (APT) and axie infinity (AXS) before the recent unlock are two examples.
"For investors, the unlocking focus is on percentages: If approximately 50 percent expect heavy selling pressure," wrote Conor Ryder, a research analyst at Kaiko Research. View The Sandbox In a previous report on token unlocks and price action, Ryder concluded that the token distribution for the upcoming unlock is similar to that on August 14th, and therefore SAND will behave similarly as selling pressure builds.
“The day after unlocking on August 14th, nearly 75% of significant trades were sell orders as investors looked to cash out of SAND. Selling pressure persisted in the days after unlocking as sell orders dominated buying ,” Ryder wrote.
“The distribution of SAND unlocks is skewed towards investors, so token performance is affected during the unlock period,” he added.
The Sandbox has an unlock schedule that expires every six months until 2025 and distributes the same funds to investors. As a result, SAND holders could face serious headwinds until then, Ryder said.
