A token sale is usually followed by a token lock-up (also known as a vesting period), during which token owners of a cryptocurrency project are not allowed to sell their tokens. Initiatives can avoid liquidity problems throughout the lock-up phase as they develop their support base for new projects.
The project makes more money with the help of lock-up periods since both the demand for and the value of the token increase. The fundamental justification for implementing a lock-up period, however, is to prevent the market from being overrun with tokens, which would diminish the token’s value owing to increased sales.
Locked up tokens are not included in the supply that is currently in circulation and are not taken into account by analysts when performing technical analysis.
