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.

The price of Pi Network (PI) plunged this week after a highly anticipated ecosystem news event backfired, continuing its fall on Friday.

Initially, Monday saw the coin soar to $1.6640, erasing billions of dollars in value. It later crashed to a low of $0.7236 on Friday, continuing its decline. This downfall occurred as an expert highlighted a critical flaw that exposes holders to risk.

Expert Warns on Pi Coin

A popular crypto analyst, who boasts nearly 90,000 followers and is known for dissecting risky coins and scams, expressed his concerns about Pi Network. In an X post, he pointed out a major problem with the coin.

According to him, the 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 still controls over 92.5 billion locked tokens, which are distributed across several wallets. These tokens are likely used to fund operations and pay salaries.

According to this page, the founders of Pi Network have a total of 7.4 billion tokens, while the team holds another 8.4 billion coins. This explains why the network has struggled to attract partners and major exchanges have refused to list it.

This arrangement poses several risks. Firstly, there is a risk that 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.

Also, some popular centralized tokens have crashed in the past. Most recently, Mantra price crashed, with some experts blaming it on token dumps by the team.

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 not much is known about it. Notably, the foundation has not been audited, despite Pi Coin having a 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, with the distributions to pioneers being controlled by the obscure Pi Foundation.

Pi Network faces other significant risks, such as the absence of a well-functioning ecosystem and regular dilution. This year, an additional 1.4 billion tokens are expected to come online.

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 level 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.