Here’s why Pi Network price dropped after the ecosystem fund news
Pi Network price retreated by over 13% after the Core Team launched the $100 million ecosystem fund.
Pi Coin (PI) dropped to $1.06, down more than 35% from its highest point this week. This decline brought its market capitalization to $7.5 billion, down from a high of over $10 billion earlier in the week.
The coin dropped after the developers launched Pi Network Ventures, a $100 million fund to invest in startups leveraging its technology. The goal is to build a thriving ecosystem of applications in industries like retail and finance.
First, following the announcement of the ecosystem fund, the price of Pi Coin fell due to a phenomenon known as “buying the rumor and selling the news.” This occurs when investors buy an asset ahead of a major event and then sell when the news becomes public.
In Pi Network’s case, the token surged nearly 200% when the developers hinted at the upcoming news. This same dynamic also explains why the Official Trump (TRUMP) meme coin could decline after the exclusive dinner.
Second, Pi Coin’s price dropped because the ecosystem fund won’t have an immediate impact on the token. For one, it will take months before funded projects begin deploying on the network. Additionally, there’s no guarantee that these projects will gain meaningful traction among users.
Pi Network ecosystem fund fell short of expectations
Third, the announcement fell short of what many Pi Network investors were expecting. Much of the speculation centered around a potential exchange listing with one or more tier-1 platforms like Coinbase, Binance, or HTX. Such a listing would likely have had a bullish impact on the token by providing access to millions of potential traders.
A Pi Network token burn would also have been well received, as tokenomics remains one of the biggest concerns among investors. Many holders are wary of the 1.468 billion tokens expected to enter circulation over the next 12 months. A burn would have helped offset this looming supply increase.
Pi Coin also retreated as broader sentiment in the crypto market weakened. Bitcoin dropped to $103,300, while the total market capitalization of all coins fell by 0.6% to $3.34 trillion. When the market reverses, recent top performers often become the biggest laggards.
