The Sui Network is under pressure this week as it prepares for one of its largest token unlock events to date. On July 1, the project is releasing 58.35 million SUI tokens—valued at approximately $164.44 million—into circulation. This move represents around 1.72% of SUI’s total market capitalization and has reignited fears of a possible sell-off in the days ahead.

Token unlocks are typically scheduled to release previously locked assets, often tied to vesting periods for team members, early investors, or ecosystem incentives. While they are a standard part of tokenomics, large unlocks often raise concerns due to the increased token supply entering the market at once, which can trigger downward price pressure.

SUI has been trading within a descending channel pattern for some time and had recently shown signs of recovery, posting a 20% rally and approaching resistance near the upper boundary of the channel. However, this short-term strength now appears to be fading. At the time of writing, SUI was trading near $2.72, down 1.75% in the past 24 hours. The token is now hovering just below a critical ascending trendline that had previously served as support throughout its recovery.

Technical indicators are not encouraging. AMBCrypto’s analysis suggests that a confirmed breakdown below the ascending trendline could result in a sharp drop. If the price closes a four-hour candle below this trendline, analysts expect a 10%–12% decline, potentially bringing SUI down to the $2.40 level.

Adding to the bearish sentiment is the decline in trading volume. Data from CoinMarketCap shows a 10% drop in SUI’s 24-hour volume, signaling reduced investor engagement. Lower volume in the face of negative news often signals caution from market participants and a lack of conviction to push the price higher.

From a broader technical perspective, SUI remains below its 50-day Exponential Moving Average (EMA) on the daily chart. This is generally seen as a bearish signal, indicating that downward momentum may continue as long as the price stays beneath this level.

On-chain data further supports the bearish case. According to CoinGlass, traders are currently taking defensive positions. At the $2.67 level, $12.45 million worth of long positions have been built, suggesting that many traders were expecting a rebound. However, above that, at $2.848, short positions dominate—with $16.66 million in bearish bets signaling that traders don’t believe SUI will break that resistance level anytime soon.

The bearish setup comes at a time of broader market uncertainty, and the unlock has only intensified this cautious outlook. While some might argue the event is already priced in, the price action and trader behavior suggest otherwise.

Interestingly, there is a silver lining for long-term investors. While short-term traders brace for volatility, exchange data shows that $16.40 million worth of SUI tokens have recently flowed out of centralized platforms. This could be interpreted as accumulation, with holders moving tokens off exchanges for long-term storage—often a bullish indicator over a longer time horizon.

This divergence in behavior highlights the complex sentiment currently surrounding SUI. While traders are bracing for more downside in the near term, others appear to see the price dip as a buying opportunity, particularly with the asset approaching technical support levels.

Looking ahead, SUI’s near-term price movement will largely depend on how the market digests the token unlock. If the token can maintain support above $2.60 and avoid a clean break of the trendline, a consolidation phase could follow. However, if bears remain in control and push the price below key support, the predicted 10%–12% correction toward $2.40 may play out swiftly.

In summary, SUI is at a pivotal moment. With bearish technical signals and cautious trading behavior taking hold, the immediate outlook appears weak. Yet, significant outflows from exchanges suggest that some market participants are using the current pullback as a long-term entry point. Whether SUI finds a stable floor or continues to decline will depend on how the broader market absorbs the unlocked tokens in the coming days.