The Pi Network price has crashed, moving below a crucial support level. It dropped to a low of $0.6445, hitting its lowest point in the last week. Nevertheless, the Pi coin price remains 60% higher than its level a few weeks ago. One top crypto analyst has given two key reasons why the coin may crash by 55% in the coming weeks.
Expert Explains Why Pi Network Price May Dive Soon
The Pi token remains significantly lower than its all-time high, and its attempt to bounce back has encountered substantial resistance at $0.7822.
One crypto analyst believes that the coin has more downside because of the rising supply of tokens on exchanges.
According to its tokenomics, billions of Pi tokens will continue to be unlocked in the foreseeable future. Precisely, over 1.5 billion tokens will be released this year.
Economics 101 states that an asset’s price is determined by supply and demand. An asset’s price crashes when its supply rises at a time when demand is not rising. In Pi Network’s case, supply comes from the token unlocks and pioneers who spent over 6 years mining it.
Pi Network’s demand is still low because many investors have no access to it since it has not been listed in popular exchanges like Coinbase and Binance. Therefore, the analyst warns that the Pi coin will continue falling unless the team changes its supply strategy.
One approach is to introduce a burning mechanism, in which coins are moved to an inaccessible wallet.
The analyst also warned that the Pi Network team needs to address privacy concerns to prevent a Mantra-like collapse. Mantra, a major player in the Real World Asset (RWA) tokenization space, crashed by over 90% in a 24-hour session.
Pi Network Price Technical Analysis
The four-hour chart shows that the recent Pi coin price surge happened after it formed a falling wedge pattern in the last two months. This pattern consists of two descending, converging trendlines. This partly explains why it soared by over 60% in the past few days.
The risk, however, is that the Pi Network coin has formed a rising wedge pattern. The ongoing drop happened after the two lines neared their convergence point.
Therefore, it is likely that the coin will continue falling as sellers target the key support at $0.3945, its lowest point this month. This bearish outlook will be invalidated if it rises above the key resistance point at $0.7822.
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