World Liberty Financial (WLFI) token, backed by the Trump family, has had a rocky early week, with a decline of over 22.2% in just the last 24 hours.
WLFI is trading for $0.182, with a trading market capitalization of $4.49 billion and a 24-hour total trading volume of $1.49 billion as of this morning.
The downward trend comes after WLFI received a brief rally to $0.331 when opening early in the week on secondary markets.
Industry analysts cite this typical “price-discovery” activity, where early traders take profits selling off their own tokens, and add downward pressure from investors.
WLFI has a unique story and profile, lending it to a speculator audience driving volatility as well.
Token Unlocks and Early Investor Activity Exert Bearish Pressure
The WLFI’s rapid decrease started from the September 1st token unlock, where 20% of presale tokens were released with prices between $0.015 -$ 0.05.
Early buyers, including prominent investors such as Justin Sun, suddenly had access to tokens trading far above their bought price, which likely encouraged them to profit take.
While Sun has committed to holding his $145 million position, retail investors have not been patient, which added to sell pressure.
The added circulation supply was already weighing on the price, and trading volume is down 43.5%, where liquidity could not keep up with the fresh wave of exits.
Investors are now staring at the calendar regarding future token unlocks, which have the potential of trigger more selling waves if confidence continues to weaken.
Also Read: ALT5 SIGMA Announces Major $1.5B Private Placement To Purchase Trump-Backed WLFI Tokens
Token Burn Attempt to Stabilize Price Falls Short
As a response to the sell pressure, WLFI completed a token burn on September 2 by removing 47 million tokens from circulation.
Although token burns or tokenomics burning are meant to apply selling pressure and provide price support, the burn was a nominal 0.19% of WLFI’s supply of approximately 25 billion tokens already in circulation.
That said, Etherscan has verified this burn took place and the total supply of WLFI reflected a supply reduction of just under 100 billion.
Even with the act of performing a token burn, WLFI has continued to slide downwards following the announcement.
Traders can further not make a case for burning this nominal number of tokens to make a short-term impact on the price stability of WLFI.
Political and Regulatory Risks Add to Investor Anxiety
WLFI’s close affiliation with the Trump family, who owns a 40% stake via DT Marks DeFi LLC, has brought WLFI both notoriety and notoriety.
Notably, they saw a surge of over $6 billion in their family net worth after the initial increase recorded due to major listings of the WLFI token, UnoCrypto reported.
While political branding presents visibility to the project, it also exposes WLFI to increased scrutiny from regulators because the company is associated with USD1, a stablecoin that appears likely to face challenges from a more scrutinous SEC focused on other digital assets.
Critics also accuse the governance model of violating the key technocratic principles of decentralization, which is another risk to investor sentiment.
As regulators around the world clamp down on high-profile tokens, WLFI’s political branding could have a double effect; It can breed interest but also increase risk.
Also Read: Influencer Andrew Tate Suffers $67,500 Loss On Trump Family Backed WLFI Token Long Position
Security Breach and Investor Concerns Over Long-Term Outlook
In addition to the chaos, WLFI token holders were also attacked on September 2nd on the back of hackers exploiting Ethereum’s EIP-7702 delegate contract mechanism, which led to reports of stolen funds and drained wallets, according to UnoCrypto.
Login and registration attempts remain rife with uncertainty and dissatisfaction among investors regarding the latest volatility of WLFI tokens, which is further aggravated through WLFI’s uncertain roadmap.
From a technical analysis perspective, WLFI currently looks to be forming a bearish flag pattern on the Day timeframe, which indicates further decline.
However, from a retail trader’s perspective, many traders are hopeful/enthusiastic about “dead cat bounce” opportunity in the short-term.
From a medium-to-longer term approach, WLFI’s potential will rely on being able to address security concerns moving forward, endure scrutiny under regulatory review, and prove usefulness in a real-world application.
Until this occurs, WLFI is certainly under a lot of stress and caution is needed from both retail and institutional players.
Whales Face Heavy Losses as WLFI Token Plunges Over 40%
A number of whale wallets lost large sums with the Trump-linked World Liberty Financial (WLFI) token as price continued to drop even in light of efforts to alleviate supply.
Whale wallet 0x432 lost $1.6 million when it closed a leveraged long position, only a few hours after taking a $915,000 profit on a previous transaction.
Other investors quickly followed suit, showing a loss of confidence in the project. This downturn in price occurred even after WLFI burned 47 million tokens, which turned out to be too little, too late to stabilize the price.
WLFI has dropped more than 41% of its value since it began trading, with another significant whale 854…RaR is taking a million-dollar loss on their long position and whale 0x1…527 as well.
Others made profits shorting WLFI throughout the downturn. However, the ‘flood’ of liquidations profited during a downturn, documents weakening energy around this project, as WLFI is now among the top 10 most bearish tokens, in terms of investor confidence.
Also Read: Trump Family Backed WLFI Blocks 2 Crypto Hacker Attacks From Compromised End Users, Here’s All