Pi Token Drops 73% Amid Supply Surge, Controversy

Pi Network’s native token, PI, has experienced a substantial decline, dropping 73% from its all-time high of $2.99, which was reached on February 26. As of the latest data, PI is trading at $0.81, approaching its launch price of $0.70 on February 20. This performance is notably worse than the average correction seen in the broader crypto market, where altcoins have corrected by 6.9% over the same period. The drawdown in PI’s value is over 10 times deeper than the market average, highlighting the unique challenges faced by the token.

The primary factor contributing to PI’s decline is the token’s design, which allows users to mint new tokens by interacting with applications on the network. This mechanism increases the supply of PI tokens, exerting downward pressure on its price. According to on-chain data, Pi Network is set to issue over 102 million PI tokens over the next 30 days, averaging 3.4 million tokens daily. This issuance represents more than 1% of PI’s circulating supply. At the current price of $0.81, the dollar-denominated supply pressure amounts to $82.6 million, or approximately $2.7 million daily. This significant supply increase is a key driver of the token’s price decline.

The controversy surrounding Pi Network has also played a role in its recent performance. The project has faced criticism for its operations, which some industry participants have likened to a multi-level marketing scheme. Concerns have been raised about the project’s delayed mainnet launch and the lack of detailed information on token utility, leading to questions about whether Pi can deliver on its promise of accessible, decentralized value transfer. Additionally, a report issued by law enforcement described Pi as fraudulent, alleging that the project targeted vulnerable populations, including elderly users, by promising financial gain. The report also accused the network of harvesting users’ personal data and attributed financial losses, including pension depletion, to the project’s influence.

In response to these allegations, Pi Network issued a public statement on February 22, rejecting the claims and clarifying its position. The team stated that the report referred to unauthorized third parties falsely associating themselves with Pi and that no authorities had contacted Pi Network regarding the matter. The project emphasized its intention to launch responsibly and reiterated that it is not affiliated with the actors mentioned in the report. Despite these clarifications, the controversy has continued to cast a shadow over the project, contributing to the decline in PI’s value.

The future of Pi Network remains uncertain, as the project navigates these challenges and works to address the concerns raised by industry participants and regulators. The significant supply increase and the ongoing controversy are likely to continue exerting downward pressure on PI’s price in the near term. However, the project’s ability to deliver on its promises and address these issues will be crucial in determining its long-term prospects.