Over the past few weeks, a lucky set of factors boosted the Pi Network price to impressive highs. However, conditions have recently started turning, and are setting the stage for a major collapse.
On Friday, March 21, PI Network experienced a major correction, losing 25% in just one day and dropping to $0.8699. The token also lost 45% in the last week and 70.9% from its all-time high of $2.98 in late February.
The immediate reason for the price drop was likely a series of major token unlocks in the past few days. On March 20, almost 24 million PI tokens hit the markets, inducing significant selling pressure in the relatively illiquid market.
The selling pressure will likely continue, at least until March 23, when unlock values will drop below 5 million tokens. Some traders anticipate a potential reversal then, as a lower emission rate will help with price stability.
Still, it is not clear whether a battered PI market will be able to absorb millions of new PI tokens each day. This was especially true when the token experienced a series of controversies. These include technical issues with token migration to the mainnet, slow KYC verification, etc.
Furthermore, some have even called the Pi Network crypto project a pyramid scheme and pointed out its lack of real-world use cases. Namely, new PI tokens come into circulation only when one person invites another user to the network.
What’s Next for PI Network?
While a combination of all these factors drove the collapse, the biggest factor was that the token was overvalued to begin with. Currently, Pi Network has a market cap of $5.89 billion, giving it an impressive 23rd rank among all crypto assets.
What is more, this supply will expand rapidly in the future. The token has a circulating supply of 6.79 billion PI at present, a fraction of its total 100 billion Pi. If all the tokens were unlocked today, PI Network would have to be bigger than BNB, Solana, and Dogecoin to justify its current price. For this reason, further corrections are likely.
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