The price of Pi Network plunged this week after a highly anticipated ecosystem news event backfired. Initially soaring to $1.6640 on Monday, Pi Coin later crashed to a low of $0.7236, erasing billions of dollars in value. This decline also occurred as an expert raised concerns about a critical flaw that exposes holders to risk.
Expert Warns on Pi Coin
A popular crypto analyst with nearly 90,000 followers has raised concerns about Pi Network. In an X post, he noted that the coin has a major centralization problem that exposes holders to significant risk.
Pi Network has a maximum supply of 100 billion tokens and a circulating supply of 7.1 billion coins. This means that the obscure Pi Foundation controls over 92.5 billion locked tokens today. As per a PiScan page, these tokens are distributed across several wallets.
This arrangement poses several risks. First, the network may be hacked, or a rogue member of the team could decide to flip, collapsing the whole project. As we saw this week with the Coinbase hack, no company or project is safe from such malicious activities.
Some popular centralized tokens have crashed in the past. Most recently, the price of Mantra crashed, with some experts blaming the team’s token dumps. Terra and Safemoon insiders also sold millions of tokens before their collapse.
Secondly, the analyst also warned that Pi Network was highly centralized, which explains why top-tier exchanges have refused to list it and why it has struggled to gain partnerships with major brands.
This centralization has given the Pi Foundation too much power, as it controls everything, yet little is known about it. Notably, the foundation has not been audited, despite Pi Coin’s fully diluted market cap of over $72 billion.
Thirdly, the analyst warned that Pi Network does not use mining like Bitcoin. Instead, all tokens are pre-minted, and the obscure Pi Foundation controls the distributions to pioneers.
Pi Network faces other significant risks, such as the absence of a well-functioning ecosystem and regular dilution. Over 1.4 billion tokens are expected to come online this year.
Pi Network Price Technical Analysis
The eight-hour chart indicates that Pi Network’s price continues its strong downtrend and is now at its lowest since May 10. It has plunged below the 50-period moving average, while the PPO indicator has made a bearish crossover. The Relative Strength Index (RSI) has pointed downwards and moved below 50.
Therefore, the path of least resistance for Pi Coin’s price is bearish. The next level to watch is the psychological point at $0.50.
