SUI Price Drops 21% After 44 Million Token Unlock

Sui [SUI] began June with a token unlock, releasing 44 million tokens into the market, equivalent to 2% of the total supply. This event has sparked questions about how the market will absorb the new supply, especially given the current technical landscape.

SUI's price has been on a downward trajectory since its peak in early May, dropping nearly 21%. Despite Bitcoin [BTC] reaching new all-time highs, SUI has struggled to gain momentum. The bulls have made several attempts to establish support, but each effort has been met with resistance, indicating that the bears currently dominate the market.

The recent token unlock presents two potential scenarios for SUI's price action. If there is strong demand from buyers, it could lead to a short squeeze, where shorts are forced to cover their positions, driving the price up. However, if demand does not materialize, SUI could experience a deeper retracement, potentially falling below the $3 mark.

On-chain data from CryptoQuant shows that SUI's 90-day Spot Taker CVD has turned green for the first time since last year, indicating a return of genuine buying pressure in the spot market. This surge previously drove SUI to its all-time high of $5.36 in January. However, the Futures Taker CVD has remained red since May 22, reflecting persistent selling pressure as shorts bet on further downside.

This divergence suggests a classic bullish setup, where spot bulls are accumulating while futures shorts are increasing their positions, setting the stage for a potential short squeeze. The recent token unlock appears to have reestablished meaningful bid support, and if demand continues, SUI could test resistance near $3.50, potentially paving the way for a push toward $4 in the near term.