Crypto-specific events: token unlocks, halvings, ETF flows
Token unlocks, the Bitcoin halving, spot ETF flows and network upgrades are events specific to the crypto market. Most have dates known in advance, so the expected effect may already be priced in before the event. How an event will show up in price is always uncertain.
What are crypto-specific events?
Macro data affects all markets. Alongside it there are events that concern only crypto, and often only a single coin: new supply entering circulation, changes to reward rules, fund flows or changes to a network's rules.
What most of these events share is that their dates are known in advance. The expected effect of a known event can be reflected in price before the day arrives. So a move against expectations on the day itself is not surprising.
Token unlocks
In many projects, the tokens set aside for the team, early investors and the foundation follow a vesting schedule. They stay locked for a set period and are then released all at once or in instalments spread over months. Once unlocked, these tokens can enter circulation.
The size of an unlock is judged relative to the circulating supply. As an example, an unlock worth 1% of circulating supply does not carry the same weight as one worth 10%. Who receives the tokens matters too: it is not certain they will all be sold; some may be held for a long time or locked again.
The Bitcoin halving
Each new Bitcoin block creates new coins; this is the block subsidy. By protocol, the subsidy halves every 210,000 blocks. As blocks are produced about every ten minutes on average, this happens roughly every four years. The subsidy started at 50 BTC and has halved at each halving; transaction fees are not affected by this rule.
A halving slows the rate at which new supply is added. Its date is known roughly years in advance and it is widely discussed in the market. The moves seen after past halvings rest on very few examples, and they are hard to separate from the other conditions of those periods.
Spot ETF flows
Spot Bitcoin and Ether ETFs are exchange-traded funds that hold the underlying crypto asset. When demand rises, authorised participants create new shares and the fund holds more of the asset in return; when demand falls, shares are redeemed and the fund's holdings shrink.
The daily total of these moves is tracked as net inflow or outflow. The figures are usually published after the US trading day, so they arrive after that day's price move. Flows can affect price, but they can also follow it.
Network upgrades and hard forks
- Network upgrades change a blockchain's rules or how it works. Their dates are often announced in advance.
- A hard fork is a rule change that older software does not accept. If nearly all participants adopt it, the chain stays as one; if not, it can split in two.
- During an upgrade, some exchanges may temporarily pause deposits and withdrawals for that coin.
- An upgrade that is delayed or goes badly can be the source of an unexpected move.
One known event, three reactions
Different pictures can appear around an event whose date is known in advance.
Priced in beforehand
Price moves in the expected direction in the weeks before the event, while the day itself brings a limited move or one the other way.
Reaction afterwards
There is no clear move before the event; selling pressure appears afterwards, for example following a large unlock.
No clear effect
The event passes and price keeps its own structure. Among the other factors of the period, the event was not decisive.
What it shows, what it does not prove
What it shows
- When and by how much supply, reward rules or fund flows change
- On which dates volatility may pick up
- How large an event, such as an unlock, is relative to existing supply
What it does not prove
- Which way the event will move price
- That unlocked tokens will be sold
- That moves seen around past halvings or ETF flows will repeat
The MarketLevelMap view
How it relates to zones
Volatility can pick up around an event, and price can reach a support or resistance zone faster than expected. These moves often leave long wicks. Reading the zone as a band and looking at the close of the 1H, 4H or daily candle helps tell the first reaction on the day apart from a lasting breakout.
An event can explain the context of a reaction at a zone, but it does not replace the zone. Reading price against the zones again once the event has passed is a sounder way to judge whether its effect has lasted.
For general information only. Not investment advice.Last updated: