Pi Network price continued its downward trend on Saturday as concerns about its centralization and token unlocks remained.
Pi Coin (PI) dropped to $0.7040, down by over 57% from its highest point this week. This decline in a volume environment led to a $6 billion wipeout as the market cap moved from $11 billion to $5 billion.
Pi Network has numerous risks, key among them is the continued centralization. CoinMarketCap data shows that Pi has a maximum supply of 100 billion coins and 7.15 billion in circulation.
Pi differs from Bitcoin (BTC), whose new coins are produced through mining, which involves solving complex mathematical calculations. It also differs from proof-of-stake crypto projects like Cardano (ADA) and Avalanche (AVAX), which depend on validators.
Instead, all the 100 billion Pi coins have already been pre-mined and stashed into wallets controlled by the Pi Foundation. See below. The foundation controls the 92 billion unlocked coins.
This situation presents substantial risks to the Pi Network community. For one, the membership of the so-called Pi Foundation has not been made public, and the community members’ input is not represented in it.
The other risk is when a hacker or an insider accesses the Pi Foundation wallets and decides to dump the tokens. Additionally, the Pi Foundation is not subject to any audit to verify its holdings, which are estimated to be worth $70 billion.
This centralization and opaqueness mostly explain why major exchanges like Binance and Coinbase have resisted listing Pi coin, three months after the mainnet launch.
Pi Network has other risks that are hurting its price. For example, millions of tokens are brought to the market each month. 1.48 billion tokens will be unlocked in the next 12 months, and billions more in the next few years.
Pi Network price analysis
The eight-hour chart shows that the Pi Coin price peaked at $1.6673 ahead of the highly anticipated ecosystem news event. It then plunged to the current $0.6980, its lowest point in over a week.
Pi has moved below the key support at $0.7760, the highest swing on April 12. Moving below that support invalidated the formation of the bullish break-and-retest pattern.
The coin has also moved below the 25-period moving average, while the Relative Strength Index has pointed downwards and moved below 50.
Therefore, the Pi Network price will likely drop and retest support at $0.6, which coincides with the ascending trendline connecting the lowest swings since April 7. A drop below that level will point to more downside, potentially $0.40.