Pi Network price has lost momentum and erased billions of value in the past few weeks. This crash is likely because of the ongoing concerns about dilution, as over 1.6 billion coins will be unlocked this year. It also happened as Bitcoin and other altcoins crashed. So, how will the rumored Pi coin burn affect the price?
Pi Coin Burn Would be a Catalyst
The upcoming Pi Network token unlocks have contributed to the ongoing Pi price crash. Data shows that over 118 million tokens will be burned this month. Over 1.6 billion tokens currently valued at $1.4 billion, will be unlocked in the next 12 months. The average monthly unlocks will be 136 million tokens.
Pi Network will have more unlocks in the future. According to CoinMarketCap, it has a circulating supply of 6.84 billion tokens against a maximum supply of 100 billion.
These token unlocks are highly bearish on a cryptocurrency because they increase the number in circulation and dilute existing ones. Also, crypto prices often drop ahead of a big token unlock.
Crypto projects offset these unlocks by executing burns. A token burn is a situation where crypto tokens are moved into a dead address, where they can never be accessed. It helps the network by removing the number of tokens in circulation.
A Pi coin burn would help to boost its price by reducing the number of tokens in circulation. While such a future burn has not been confirmed, there are rising odds that it will happen in some form.
One approach will be to burn all tokens mined by pioneers who failed to conduct their KYC and migrate them to the mainnet. These tokens could be substantial since about 12 million pioneers conducted the migration. At its peak, Pi Network had over 50 million miners.
The other approach would be to burn fees that the network will generate over time. Pi Network had about 100 ecosystem apps during its Pi mainnet launch, a figure that may keep growing, Fees made from these transactions could be burned.
Pi Network Price Technical Analysis
The Pi Network core team has not confirmed about a potential token burn, but market participants believe that it is just a matter of time. Such a coin burn, coupled with centralized and decentralized exchange listings, and a potential PI ETF would be highly bullish for Pi. Odds are that it would jump and hit the value of Pi at $3.14.
Before that happens, however, there are signs that the coin will remain under pressure for a while. The four-hour chart shows that the Pi coin price has formed a head and shoulders pattern. This pattern is made up of a head, two shoulders, and a neckline. It has already moved below the neckline at $1.2373.
Pi Network price is also forming a small bearish pennant pattern, which comprises a vertical line and a symmetrical triangle. Therefore, the coin may drop and move below the support at $1 soon. A rebound above the right shoulder at $1.8 will point to more gains as it will invalidate the bearish Pi coin forecast.
The post PI Coin Burn: Is Pi Network Planning a Major Event and How It Will Impact Price? appeared first on CoinGape.
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