Key Insights
- After weeks of uncertainty, Pi Network token is showing signs of life again after plummeting to an all-time low of around $0.4
- By Friday evening, Pi Network rebounded hard and rose by over 36% within hours to touch $0.71.
- From a technical standpoint, the next key resistance levels to watch out for are the $0.87 zone and the psychological $1.00 mark.
- Some major causes of the crash could be Pi’s tokenomics, slow ecosystem growth, lack of exchange listings and more.
- Investors should treat any price rallies with cautious optimism, because a break below $0.5 could bring the ears back into action with force.
After weeks of uncertainty, Pi Network token is showing signs of life again.
The token, which has been marred by controversy since its delayed mainnet launch, and the limited exchange listings, recently plummeted to an all-time low of around $0.4.
However, just as things were starting to look bleak, the project staged a major turnaround, and has gained around 50% within a matter of days.
What could be the reason for this surge, and what can investors expect from this token?
Is this the start of a genuine recovery, or is this another dead-cat bounce?
From Collapse to Comeback
Pi Network devastated investors with its recent dip to $0.40. This price level marked its lowest post-launch price to date, especially considering how the cryptocurrency was trading above the $3 mark just a few months earlier in February.
This decline has so far been driven by a mix of poor investor sentiment, a lack of utility and no listings on top exchanges.
Most investors were in the red.
However, by Friday evening, something changed in the market. Soon after hitting this all-time how, Pi Network rebounded hard and rose by over 36% within hours to touch $0.71.
The crytpocurrency has since settled lower, and now trades at around $0.62.
However, this price level still marks a major recovery from it was, just days ago.
The interesting thing about this bounce is that it wasn’t just a random pump.
According to on-chain indicators and technical patterns, there is a growing correlation between this cryptocurrency and Bitcoin, indicating that Pi could be on its way to a new phase.
Technical Indicators Signal Strength
The recovery in PI’s price is backed by major price indicators. For example, Pi Network is showing signs of a bullish divergence on the hourly chart.
This trend occurs when the price of an asset forms lower lows, while momentum indicators like the MACD or RSI begin to trend upwards.
These divergences tend to point towards major price reversals, and Pi might have bottomed out.
The 4-hour chart in particular, shows that the cryptocurrency has rebounded from the base of the descending trendline pictured above.
As such, Pi could be looking towards a bullish breakout, especially considering how high its trading volumes have risen lately.
In Pi’s case, the volumes exploded just past the $1 billion mark (the highest it has been since early March).
Why Did Pi Network Crash in the First Place?
Before analyzing where Pi could be headed to next, it is important to understand why the crash happened in the first place.
To begin with, Pi Network’s Tokenomics had a major role to play in the crash, and will likely add further pressure, going forward.
Over the next 12 months, the circulating supply of the cryptocurrency is expected to increase by 1.6 billion tokens.
These unlocks will dilute the existing supply of the cryptocurrency, and will likely lead to more downward pressure on price.
Another major issue causing the price dips is the lack of major exchange listings.
Since its launch, Pi has been unavailable on top exchanges like Binance or Kraken.
This limits liquidity and prevents millions of users from buying or selling the token easily.
As such, for a token with ambitions to become a mainstream digital asset, this can be a huge limitation.
Finally, while Pi network initially promised to on-board developers for a stronger defi ecosystem, its infrastructure has yet to mature.
Many developers continue choosing to build on more mature networks like Avalanche and Solana, with Pi left on the back burner.
All of these issues combined, are the reason for the drop in value and investor confidence.
What’s Next for Pi Network?
From a technical standpoint, the next key resistance levels to watch out for are the $0.87 zone and the psychological $1.00 mark.
If Pi can break through these levels with strong volume and market support, it could kick start a new territory claim from its previous decline.
A move above the $1 mark would represent over a 100% recovery from its most recent low/
It could even reignite investor interest.
On the other hand, a break below the $0.5 price level would indicate a lower low for the cryptocurrency, and would invalidate the bullish outlook altogether.
A lot will depend on the general crypto market as a whole. However, Pi network needs to make progress on its own, in terms of exchange listings, transparency, ecosystem development and more.
Weekend Snapshot
The overall crypto market has been relatively flat over the weekend, and Pi network remains one of the best performers over the last few days.
Major altcoins like Ethereum, XRP, BNB and Solana have seen minor losses within the same timeframe, with AVAX leading the decline and dropping by over 4%, along with others like CRO, DOGE, and TON also slipped.
Bitcoin continues to trade above the $82,000 zone after recovering from an earlier dip to $81,600.
The cryptocurrency’s market cap remains above the $1.65 trillion zone, with a dominance at nearly 60%.
Overall, Pi network is back on many investors’ radars.
However, the road remains bumpy. All of the aforementioned problems are issues that need solving, and investors should treat any price rallies with cautious optimism.
For now, all eyes are on the $1.00 level.
A break above this price level could shift the narrative once again. A break below $0.5 on the other hand, could bring the ears back into action with force.
