After officially launching the mainnet, Pi Network experienced a significant drop in value, resulting in losses of up to $6 billion within just the first two days. On Saturday, the price of Pi Network fell to just $0.76, a figure much lower than the launch price of $2. Below are four main reasons explaining this decline.
1. Allegations of Fraud
One of the most significant reasons leading to the price drop of Pi Network is the statement from Ben Zhou, the CEO of the Bybit exchange. He called Pi Network a 'scam', citing a report from China that claimed this project targets the elderly. Although Pi Network has publicly denied these accusations and asserted that their project has been developed over the past six years, the statement from a CEO of a major exchange may have diminished investor confidence.
It is noteworthy that this event coincided with a $1.4 billion hack on the Bybit platform, creating a sense of panic in the cryptocurrency investment community.
2. Selling Trend of Pioneers
Another reason for the sharp drop in the price of Pi is the panic among the token holders. Many early adopters decided to sell their tokens immediately after the mainnet launch. Traditionally, investors tend to sell tokens right after the launch to avoid the risk of loss, especially when they see other tokens in the cryptocurrency space decreasing without signs of recovery. This has created significant selling pressure on the price of Pi Network's token.
The chart shows that many 'tap-to-earn' tokens on the TON blockchain, including Notcoin and Hamster Kombat, tend to decrease in price after the mainnet launch, which further adds to the negativity surrounding the emergence of Pi Network.
3. Overall Decline of Newly Launched Tokens
The price of Pi Network is also affected by the fact that many newly launched tokens in the market have recently seen significant price declines. For example, the Wormhole token, which peaked at $1.6 after an airdrop last April, is now only $0.18. Other tokens like ZkSync and EigenLayer have also recorded significant drops from their highs.
Additionally, recently, some meme coins like Trump and Melania have lost over 80% of their value from their peak, making market sentiment even more negative and affecting the price of Pi Network.
4. Poor Cryptocurrency Market Conditions
The price collapse of Pi Network has been exacerbated by the cryptocurrency market undergoing a difficult phase. The price of Bitcoin, one of the leading cryptocurrencies, is in a correction phase and has dropped 10% from its all-time high. Other altcoins like Ethereum, Cardano, Algorand, and Near are also down by 10% or more from their highs last November.
The fear and greed index in the cryptocurrency community has dropped from an extreme greed level of 88 to 40, indicating that market sentiment is currently relatively fearful. Generally, newly launched tokens perform better in a growing market context, similar to initial public offerings, when many newly listed companies experience strong growth in favorable market conditions.
Will the Price of Pi Network Increase Again?
Predicting the price recovery of Pi Network this year is a challenging task, especially since it is still in the process of discovering its real value. The likelihood of Pi's price recovering in the future primarily depends on demand from investors, along with progress in developing the ecosystem around it.
Since the mainnet launch, Pi Network has owned about 100 applications operating on its platform. If these applications can attract a large number of users, they could positively drive the price of the Pi token. For instance, the robust development of popular decentralized applications (dApps) like AAVE and Uniswap has significantly contributed to the increase in value and attractiveness of the Ethereum network over the past years.
One of the key factors in the price recovery of Pi Network is the community's ability to participate and use Pi in real transactions. If Pi Network can develop more useful applications and enhance the usability of the currency in daily transactions, this will contribute to boosting its demand and value.
Moreover, continuously updating information and educating users about the potential and how Pi Network can operate in the modern financial environment will help build trust within the community. If users feel assured about the sustainable development of the platform, they may decide to invest more in Pi.
Finally, the interaction between investors and community development is essential for the price recovery of Pi Network. With close coordination among stakeholders and a commitment to developing the ecosystem, it is highly likely that the value of the Pi token will be enhanced in the future.
Conclusion
The fact that the price of Pi Network has dropped significantly after the mainnet launch is a complex situation, reflecting various factors from market sentiment to external allegations. However, with the sustainable development of its ecosystem and applications on its platform, Pi Network may still have the potential to recover in the future. Capturing and leveraging opportunities in the cryptocurrency space is an exciting yet risky challenge.