Could Sonic’s $74.59M token unlock lead to another 42% price dip?

• $74.59 million worth of S tokens unlocked, raising circulating supply by 7.39%.
• Market participants have already begun selling the asset, adding downward pressure to its performance.

A major token unlock for Sonic [S] went live on the 5th of July—injecting $74.59 million worth of tokens into circulation.

According to DeFiLlama, this accounted for 5.17% of the total supply and 7.39% of the circulating supply.

The sudden increase in float raised concerns about a potential supply glut. Unless matched by proportional demand, the imbalance could trigger further downside across spot and derivatives markets.

Source: DeFiLlama

This increase in float suggests that if supply outweighs demand, it could lead to a market-wide selloff. AMBCrypto analysis found that the likelihood of an equal surge in demand remains slim.

DeFi investors made the first move

At the time of writing, a selloff was already underway. Notably, decentralized finance (DeFi) investors have been reducing their exposure to S tokens.

Source: DeFiLlama

Between the 3rd and 5th of July, DeFi wallet holders offloaded $37.9 million worth of S tokens. Their cumulative holdings dropped from $836.44 million to $798.49 million.

This outflow indicates that investors are unlocking S across multiple platforms and withdrawing their assets, implying a shift from long-term holding to a more bearish, sell-oriented sentiment.

Sellers’ dominance spreads across markets

On-chain metrics showed the trend wasn’t isolated. Retail investors followed suit.

According to CoinGlass’ Exchange Netflow data, there was a significant outflow of assets over the past week, totaling $427,000 moved from private wallets to exchanges.

Source: CoinGlass

The most notable selloff occurred within the past 24 hours, during which spot investors sold approximately $110,000 worth of S crypto, accounting for more than 25% of the week’s total outflows.

Liquidation data from Coinalyze further confirmed bearish sentiment in the perpetual markets.

In the perpetuals market, long traders saw $182,800 in liquidations, while shorts lost just $8.4.

The takeaway? For every $1 wiped from bearish traders, bullish longs were hit for over $21,000. Such a lopsided ratio implied a market tilted heavily in favor of sellers.

Source: Coinalyze

January’s unlock left scars—Will July do the same?

AMBCrypto analyzed S’s performance during its last major token unlock to determine whether a similar pattern could emerge.

During the unlock event on the 4th of January—when $998.72 million worth of Sonic token entered circulation—the token experienced a notable drop.

Source: TradingView

From a local high on the 4th of January, S token declined 13.5% by the 7th. By the 20th of January, it had recorded a cumulative decline of 42.75% after forming a local low.

At press time, S created a local high on the 25th of June. While this does not confirm an impending price drop, a break below the support level at $0.3022 could signal the formation of a local lower low.

Source: TradingView

Given the prevailing bearish trend and additional supply pressure expected from the token unlock, S is likely to break down and form a new lower low.