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Pi Network Price Faces Potential Breakdown Amid Dilution Concerns
The Pi Network price has been locked in a tight sideways range since mid-April, fluctuating between $0.59 and $0.67—a ~14% band. Currently, the price is testing the lower boundary of this range, sitting at $0.58, which raises concerns about a potential breakdown to lower levels.
Technical Indicators Suggest Weakening Momentum
The Relative Strength Index (RSI) stands at 38, which is well below the neutral level of 50 and edging closer to oversold territory. This indicates a weakening market sentiment. Additionally, the Moving Average Convergence Divergence (MACD) is showing signs of fatigue. While the MACD line remains slightly above the signal line, both are nearing a bearish crossover, suggesting a possible shift in momentum to the downside.
Fundamental Risks: Token Dilution
One of the key factors contributing to the technical weakness is the risk of dilution in the circulating supply. In April alone, 21.4 million PI tokens were unlocked, which equates to approximately $12.3 million at current market prices. While this month’s unlock volume is considered modest, investors are bracing for heavier token unlocks in the coming months.
On average, over 131 million PI tokens are expected to be unlocked monthly over the next year. This steady increase in supply could put sustained downward pressure on the price, unless significant measures are taken to counteract dilution risks.
Concerns Over Large Token Holdings
A major point of contention is the nearly 72 billion PI tokens held by the PI Foundation across various wallets. Unless there is an update that involves burning a significant portion of these holdings or implementing other supply-reducing mechanisms, the price could remain under pressure for the foreseeable future.
Key Takeaways for Investors
- Monitor technical indicators like RSI and MACD for early signs of further weakness.
- Keep an eye on monthly unlock schedules, as larger unlocks could exacerbate dilution risks.
- Watch for announcements from the PI Foundation regarding token burns or updates that could stabilize the price.
With increasing supply and weakening technical indicators, Pi Network faces mounting challenges. Investors should stay informed about market trends and developments within the ecosystem to make well-informed decisions in this volatile landscape.
