IOTA Plummets 521.7% Amid Network Congestion and Regulatory Scrutiny

On May 29, 2025, IOTA’s token price plummeted 521.7% over 24 hours to $0.20015, marking a severe decline. Over seven days, the token lost 331.4% of its value, while annual losses reached 2,976.63%, underscoring sustained volatility.

Network Congestion Sparks Immediate Sell-Off

The sharp drop followed reports of persistent network congestion within IOTA’s Tangle protocol. Users and developers highlighted delays in transaction confirmations and elevated fees, eroding confidence in the platform’s scalability. Technical analyses attributed the strain to rising adoption of its machine-to-machine (M2M) payment solutions, which outpaced infrastructure upgrades.

Protocol Update Announced, but Doubts Linger

In response, IOTA Foundation engineers unveiled an update to the Coordicide protocol, aiming to decentralize network validation further. The release, however, arrived amid criticism over its timing and transparency. Analysts noted that the update had been delayed multiple times since 2023, with its current iteration not fully addressing core congestion concerns.

Automotive Partnerships Struggle to Offset Decline

Despite partnerships with automotive firms to integrate IOTA’s technology into vehicle data systems, market sentiment remained pessimistic. While the collaborations had initially bolstered optimism about the token’s utility, the recent price collapse overshadowed these efforts. A statement from the foundation emphasized long-term vision but provided no immediate solutions to the liquidity crisis.

Regulatory Scrutiny Adds Pressure

Compounding challenges, IOTA faces heightened regulatory scrutiny. Authorities in multiple jurisdictions are investigating compliance with anti-money laundering (AML) regulations, particularly regarding unhosted wallets. The inquiry has intensified selling pressure as institutional investors reassess risk exposure.

Analysts Assess Long-Term Viability

Analysts project that IOTA’s recovery hinges on resolving technical and regulatory hurdles. “The token’s fundamental value relies on real-world adoption,” noted a report, “but current conditions suggest a prolonged period of instability.” Projections for stabilization by late 2025 remain conditional on successful protocol overhauls and clarity from regulators.

As of May 29, IOTA’s market cap stood at $80.06 million, down 99.3% from its 2021 peak. The token’s trajectory now depends on whether its foundational issues can be addressed swiftly enough to retain developer and user trust.