Pi Network, buoyed by smart contract good news, will it collapse under a massive supply bomb?

▲ Pi (PI)/ChatGPT generated image ©

Despite raising expectations for ecosystem expansion by introducing smart contract functionality to the testnet, the Pi Coin price has fallen into a swamp of intense downward pressure as the foundation has dumped massive amounts of supply onto the market.

According to investment media FXStreet on April 22 (local time), Pi Network (PI) is currently trading around $0.1700 on Wednesday, following a 3% decline the previous day, showing overall weakness within a falling channel pattern. Despite the positive news of a protocol upgrade, which includes the introduction of subscription-based Smart Contract functionality, the market's buying pressure cannot absorb the massive supply dumped by the foundation, leading to price suppression.

Previously, Pi Network announced the launch of its first smart contract functionality on the testnet as part of a protocol upgrade. The Mainnet, built on the Stellar blockchain, recently completed its upgrade to version 22 and aims to reach version 26 by June. The development team has released a second Request for Comment (PiRC2) for technical review and community feedback on the subscription-based smart contract feature, expecting this feature, to be introduced with the version 26 release, to enhance token utility and boost investor confidence.

However, these technological advancements have been overshadowed by a massive supply dump from the foundation's wallets. As the second migration phase, allowing KYC-verified users to transfer tokens from the testnet to centralized exchanges (CEXs), progresses, unlocked foundation holdings are continuously pushing down the spot price. According to PiScan data, a staggering 30.54 million tokens were released from the foundation's wallet in the last 24 hours, overwhelmingly dwarfing the 2.73 million tokens leaked from exchanges and thoroughly nullifying the market's attempts to absorb the supply.

Technical indicators also warn of further downside risk. Pi Network remains trapped within a clear falling channel pattern on the daily chart and is encountering strong overhead resistance, staying below the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs). Although the Moving Average Convergence Divergence (MACD) is still above its signal line, the positive bars in the histogram are shrinking, suggesting weakening bullish momentum. The Relative Strength Index (RSI) also hovers around 45, indicating that recent attempts to rally have lost momentum.

Experts have pointed to the April 13 low of $0.1633 as a short-term downside support level. If this area, adjacent to the falling support trendline, breaks down, the price could sequentially fall to the February lows of $0.1556 and $0.1310. Conversely, if an upward reversal is attempted, the 50-day Exponential Moving Average at $0.1774 is expected to act as the primary resistance, followed by the 100-day Exponential Moving Average at $0.1858, which is analyzed to serve as a strong ceiling.

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