Death spirals happen. Its a risk that lockups expiring create ongoing dilution not met by increased demand. Thats not controversial or exclusive to crypto assets, the early liquidity is currently exclusive and competitive.
The liquidity pool technology fixes the liquidity issue and many company’s investors park additional capital in the liquidity pools. Sometimes even their unvested tokens sit in them or the generated liquidity pool shares is put in the vesting timelock smart contract, guaranteeing liquidity for others (which often increases confidence for holding, knowing that people can get out at any time)