Token price impact refers to the change in a token's price resulting from supply-side events, particularly token unlocks. When a significant amount of previously locked tokens enters circulation, it can increase selling pressure and potentially drive the price down.
The magnitude of price impact depends on several factors: the size of the unlock relative to circulating supply, the unlock-to-volume ratio, the type of recipient (team, investor, or community), and broader market conditions at the time of the unlock.
Historical analysis shows that large cliff unlocks tend to have a greater negative price impact than linear vesting releases. Tokens with unlock events exceeding 5% of circulating supply often experience measurable price declines in the days surrounding the unlock.