A Token Can Look Cheap With a Tiny 'Circulating Supply.' Then a Scheduled Unlock Date Multiplies It Overnight
5 min read
Loading...
5 min read
A new token launches. Only 10% of its coins are on the market. The price looks small and the chart looks calm.
Then a date on a public calendar arrives, and the number of coins in circulation jumps. This is the token unlock schedule at work. It is written down in advance, and most people never read it.
This post shows how a low float and a high FDV set that trap, using numbers you can check yourself.
Circulating supply is the number of coins that can be traded right now. Total supply is every coin that will exist. The gap between the two is usually locked.
Locked coins are not lost. They belong to the team, early investors and the project itself. They are released on a timetable.
Think of a bakery that sells 100 cakes today but has 900 more in the freezer. Today's price reflects 100 cakes. The other 900 are coming.
Float is the share of coins that are freely tradable. Low float means that share is small.
FDV stands for fully diluted valuation. It is the price times the total supply, as if every coin were already out. Market cap is the price times the circulating supply only.
Divide market cap by FDV and you get the float ratio. A ratio of 0.10 means only 10% of the coins are trading.
CoinGecko checked the top 300 cryptocurrencies by market cap on 8 May 2024, leaving out stablecoins and wrapped assets. It counted a coin as low float when the ratio was below 0.5. That was 21.3% of the list, or roughly 1 in 5 (CoinGecko Research).
Here is a made-up token. The numbers are round so you can follow the math.
| Today | After the unlock | |
|---|---|---|
| Price | $1.00 | $1.00 (if nothing else changes) |
| Coins trading | 100 million | 200 million |
| Market cap | $100 million | $200 million |
| FDV (1 billion coins in total) | $1 billion | $1 billion |
The supply doubled. For the price to stay at $1.00, buyers must show up with another $100 million. If they do not, the extra coins push the price down.
Who receives the new coins matters. Team and early investor coins often cost them almost nothing. Selling at any price is a profit for them.
Most projects publish a vesting schedule. Vesting means coins are released gradually instead of all at once. Two common shapes exist:
A cliff is the more dramatic one, because a big batch lands at once.
Arbitrum is a real example. On 16 March 2024 it released about 1.11 billion ARB tokens in a cliff unlock, mainly to the team, advisers and investors, and it planned monthly releases after that (FXStreet). Reports at the time put that batch at roughly 87% of the circulating supply (CCN).
Price moves after that date were reported very differently by different outlets, so we do not quote one. The lesson is the date itself: it was public for months.
Keyrock, a crypto market maker, studied more than 16,000 unlock events. Its main findings (Keyrock):
Notice the timing. The market does not wait for the day. The fall often begins weeks earlier.
This is an average across many tokens. Any single token can behave differently. Big, well-known coins with deep trading are usually hit far less than young, thin ones.
Ask four questions, in this order:
Free trackers publish unlock calendars. The main market view on the NetWort market page also helps you see whether crypto as a whole is calm or stressed around any date you find.
Unlocks are one risk. Price swings are another. Open Explore, filter to crypto, and sort by volatility and max drawdown, which is the biggest fall from a peak. Put the tokens you are curious about next to Bitcoin and see how much bumpier they are.