The Pi Coin price has staged a strong comeback this week, becoming one of the best-performing tokens in the crypto industry.
Summary
- Pi Coin price has jumped by over 80% from its lowest point this year.
- Still, the token may pull back after the Federal Reserve rate cut.
- It has moved to the overbought level, and its core challenges remain.
Pi Network (PI) token jumped to a high of $0.2795, its highest level since September and 87% above its lowest point this year. Still, three key reasons why the token may crash after the Federal Reserve interest rate cut.
Pi Coin price may crash as investors sell the Fed cut news
One potential reason why Pi Coin may crash after the Federal Reserve interest rate cut as investors sell the news. That’s because market participants have already priced in a rate cut. The CME FedWatch Tool and Polymarket odds of the cut have jumped to over 97%.
Therefore, Pi Network and other cryptocurrencies may go through a buy the rumor and sell the news situation. This is a situation where investors buy an asset before a major event and then sell when it happens.
Pi Network price is getting overbought
Technicals suggest that the Pi Coin price may crash after the Fed interest rate cut. The Relative Strength Index has moved to the overbought point of 70. Similarly, the Stochastic Oscillator has continued rising this month.
An asset can continue rising when it moves to the overbought level. However, the odds of a pullback happening normally rises when oscillators move to these levels.
The coin may also retreat to retest the upper side of the falling wedge pattern. Such a price action would be highly bullish as it would confirm a break-and-retest pattern.
Core challenges remain
The other main reason why the value of Pi may crash is that the coin has major underlying issues. First, it is one of the most inflationary tokens in the crypto industry because of its daily unlocks. The network will unlock over 1.27 billion Pi tokens in the next 12 months, which will put the price under pressure.
Second, Pi Network is a ghost chain that has no utility, and efforts to boost its ecosystem have not succeeded. For example, the $100 million fund launched in May has not made any investments.
Additionally, Pi has not been listed by any major crypto exchange since its mainnet launch in February, making it highly illiquid. It is also highly centralized, and some analysts warn that the ongoing rebound is part of market manipulation. These challenges mean that the Pi Coin value may crash soon.
