A token unlock is the event when tokens that were previously locked in a vesting contract or time-lock become freely transferable and tradeable. Unlocks are the primary mechanism through which new supply enters the market for most tokens.
Token unlocks can be categorized by their type — cliff unlocks release large batches at once, while linear unlocks release smaller amounts continuously. The market impact of an unlock depends on its size, the recipient type (team vs. investor vs. ecosystem), and current market conditions.
Tracking token unlocks is essential for understanding supply dynamics. Large upcoming unlocks can create anticipatory selling pressure even before the tokens are actually released, as the market prices in the expected increase in supply.