WorldCoin (WLD) plummeted about 9% in value in just 24 hours, settling at around $5.20. This decline is consistent with critical analysis published by DeFi^2 (@DefiSquared), currently a top trader on cryptocurrency exchange Bybit. High Concerns about significant inflationary pressures and potentially misleading marketing associated with Worldcoin.
Notably, the WLD plunge comes shortly after OpenAI, the creator of ChatGPT, announced plans to release a cutting-edge AI model called GPT-4o on Monday. This advanced model boasts the ability to engage in life-like voice conversations and interact seamlessly across text and images. Worldcoin is usually the beneficiary of OpenAI announcements, but this time the price of WLD plummeted.
Why is World Coin plummeting?
In an analysis shared with
In particular, the value of the token is falling by 0.6% per day due to emissions related to subsidies and operator charges. According to DeFi^2’s observations of on-chain analysis, most of these tokens are sold almost immediately upon issuance, adding to the downward pressure on the Worldcoin price.
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Adding to the supply issues, the Worldcoin Foundation recently announced its intention to offload $200 million worth of Worldcoin to trading companies. This move effectively increases circulating supply by an additional 18%. DeFi^2 criticized this decision, saying that the “community” allocation was misleading, with tokens being sold at a discount to entities that did not prioritize the interests of the broader community, potentially diluting the value of existing holders. pointed out.
However, the most important issue highlighted by DeFi^2 concerns the near future, when venture capital and team-related tokens will begin to be unlocked. He predicted that in just 70 days, these unlocks and continued emissions would cause Worldcoin’s supply to begin to inflate at an astonishing rate of 4% per day. This scenario could severely impact the market price and stability of the token, putting selling pressure on the market worth nearly $50 million each day.
DeFi^2’s analysis did not shy away from clearing up misconceptions surrounding Worldcoin’s affiliation with notable tech figures and organizations. He said Sam Altman, known for his role at OpenAI, is not actively involved in Worldcoin, which operates as a completely separate entity. This point addresses common misconceptions that potentially mislead investors about the nature and backing of the token.
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Moreover, DeFi^2 has drawn parallels between Worldcoin’s tokenomics and what it describes as a “predatory” economic model designed to disproportionately benefit early investors and insiders at the expense of regular retail investors. He pointed out that similar strategies were used in the cryptocurrency industry in the past, where token supply and market conditions were manipulated to provide significant profits to insiders while exposing ordinary investors to high risks and losses.
“Worldcoin could realistically be the largest wealth transfer of the entire cycle. Unfortunately, this transfer of wealth is not in the form of a universal basic income, as their mission suggests, but rather into the pockets of teams and insiders,” DeFi^2 said. He said: “The manipulative low float/high FDV design is straight out of the SBF playbook and directly enriches insiders as they hedge their locked allocations at high pre-unlock valuations via perps/OTC. “But retailers still think they’re beating the system that’s trying to raise prices.”
As the cryptocurrency community digests the stark warnings of DeFi^2, the immediate reaction was a surge in trading activity to $666 million (up 104% in the last 24 hours), with investors and speculators weighing in on Worldcoin in light of these revelations. It is likely that the position will be re-evaluated. . At press time, WLD was trading at $5.24.
Featured image from It-daily.net, chart from TradingView.com