After WLD unlocks a huge amount of tokens in July, it may trigger a months-long sell-off

2024-05-14 16:27

Read this article in 6 Minutes

1. After reaching an all-time high of $11.972 on March 10, Worldcoin's price continued to fall, and even the official announcement of the launch of the Layer2 network failed to boost the market. 2. Whale trader @DefiSquared warned that Worldcoin may become the largest wealth transfer in the entire cycle, but this transfer is not in the form of universal basic income (UBI) as implied by the official, but into the pockets of the team and insiders. 3. As the amount of WLD unlocked increases, hyperinflation is expected to occur soon, and a sell-off will break out in the next few months. 4. @DefiSquared lists the data that led to hyperinflation and analyzes the Worldcoin Foundation's behavior of selling $200 million worth of tokens to market makers at a discount, and the WLD supply will expand at a rate of 4% per day after VC and team unlock. 5. @DefiSquared warned investors to be careful of tokens designed as predatory token economies like WLD, which are designed to benefit teams and early investors, while retail investors may suffer losses when trying to push up prices.

Original title: "Whale Trader: Worldcoin may experience "hyperinflation" after unlocking in July, and the Worldcoin sell-off may last for months"

Original author: Natalia Wu, BlockTempo

Worldcoin, a cryptocurrency project supported by OpenAI CEO Sam Altman, has been on a downward trend since its price hit a record high of $11.972 on March 10, despite the official announcement in April that it would launch a Layer2 network that combines finance and identity verification.

Source: TradingView

Whale Trader: Worldcoin May See a Sell-off Wave in Several Months

Many global users who have scanned their irises and are able to receive WLD airdrops regularly are still looking forward to the subsequent performance of the Worldcoin bull market, but today (14) a whale trader poured cold water on them.

@DefiSquared, the No. 1 trader on Bybit, wrote an article on X today saying that Worldcoin may actually become the largest wealth transfer in the entire cycle, but this wealth transfer is not in the form of universal basic income (UBI) as the official implies, "but goes into the pockets of the team and insiders", and criticized Worldcoin as a fraudulent project that is actually "not really related to OpenAI".

He pointed out that as the amount of WLD unlocked continues to increase, hyperinflation will soon occur, and a sell-off will break out in the next few months.

Extended reading: "WLD fell below $8! Analyst: Unlocking exponential growth, official OTC shipments... Buying Worldcoin is risky"

Worldcoin may experience hyperinflation

In this regard, he sorted out several data that will lead to hyperinflation and analyzed:

1. The current fully diluted valuation (FDV) of WLD is $60 billion. Due to the issuance of grants and the claims of operators (most of which are sold almost immediately according to on-chain analysis), its value depreciates by 0.6% every day.

2. The Worldcoin Foundation just announced that they will sell $200 million worth of tokens to market makers at a discount; this is equivalent to selling an additional 18% of the total circulating supply to counterparties, and these 200 million tokens are derived from the "community" allocation.

3. Most importantly, with only 70 days left until VC and team unlocking begins, WLD supply will begin to inflate at a rate of 4% per day (unlocking + emission). For insiders who want to cash out with $60 billion in FDV, they face nearly $50 million in uninterrupted selling pressure every day.

WLD will begin unlocking in late July, and WLD daily emission will increase at an inflation rate of 4%. Source: @DefiSquared

Beware of low circulation/high FDV designed token economics

@DefiSquared Final warning, tokens like WLD are designed from the beginning to have predatory token economics that favor the team and early investors, and the manipulative low circulation/high FDV design is straight out of the SBF playbook, when insiders hedge locked-in allocations at high valuations through perpetual contracts/OTC, they will directly get rich; but unfortunately, retail investors still think they are beating the system and try to drive up prices.

Unfortunately, this is not a new trick in this industry, which helps ensure that insiders exit liquidity at dazzling valuations.