Token unlocking is not necessarily a good time to short? The secret traders don't tell you: Don't go where the crowd is

Over the past six months, most altcoins, especially those VC coins invested by venture capital institutions, have maintained a very weak trend. In addition to the overall market downturn, many tokens are facing a large amount of token unlocking. For example, the highly popular modular narrative project Celestia's token TIA has plummeted by 70%. Well-known trader Eugene stated that 90% of existing protocol tokens are worthless, and their 80-90% decline from listing is just a return to reasonable valuation.

Is Binance going crazy for VC coins, and the market can't handle it? He Yi: The fundamentals come from the issuer

Unlocking a large amount for shorting is not a good idea; stay away from crowded places

Trader Sisphus stated: "The problem with shorting based on large unlocking news is that the team can re-lock the tokens at the last minute, as has happened on dydx." In addition, the oracle project PYTH unlocked a large amount on May 20 this year, but the token price surged more than 40% against the trend. There are also rumors that the so-called "large unlocking news" was inaccurate, as the tokens had already been unlocked well before the surge. In other words, public token unlocking news is often manipulated.

Sisphus continued: "I don't think obvious large unlocking news is a good shorting opportunity in the cryptocurrency world, because market manipulation is legal in this industry, and they are better long opportunities."

Trader Eugene added: "Interestingly, I just discussed this topic. If you are bearish on unlocking news, you won't touch it. But if you are bullish, there are multiple ways to play it."

Sisphus further elaborated that the key is how many people know about this. "If too many people know about the unlocking, it is not a good shorting opportunity. If no one is discussing the unlock yet, it is still a good shorting opportunity," he said.

Indeed, as the saying goes, avoid crowded places. If too many people are shorting based on unlocking news, it actually means a lot of liquidity waiting to be liquidated for the market makers. In this regard, I agree with Sisphus's view.

95% of tokens are worthless, many tokens return to reasonable valuations

Eugene stated: "Few people understand that for protocols you are interested in or have a stake in, each unlock is a bullish unlocking. They are opportunities for diamond hands to accumulate more tokens, indicating market participants willing to hold long term. The problem only arises when your tokens are deemed worthless, and unfortunately, 95% of existing protocols are just in this situation. For many altcoins whose trading prices have dropped 80-90% since launch, I believe the valuations of many altcoins have approached reasonable levels."

Bloomberg: Competition coins face an early winter, selling ahead of VC unlocks leading to a decline