Worldcoin’s Risky Strategy Risks Token Value Crash


In an unpredictable twist, Worldcoin (WLD), a burgeoning player in the crypto space, finds itself skirting perilous terrain, wherein the coming weeks could see a stark downtrend. The impetus behind this unsettling forecast lies in the ambitious strategy by Worldcoin’s team to flood the market with as many as 1.5 million WLD tokens over the next half-year. This massive influx could ignite a fierce selling frenzy, thereby potentially torpedoing the token’s market value.

The details of the proposed WLD Token sale surfaced in a blog post by Worldcoin, disclosing that World Assets, a branch of the Worldcoin Foundation, aims to dispense between 500,000 and 1.5 million Worldcoin tokens weekly. The recipients of this token tidal wave are none other than a consortium of institutional trading firms strategically positioned outside the United States. The method of distribution taps into private placements, with the entire sale span estimated to wrap up within a six-month timeframe.

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This selling scheme carries seismic implications—approximately 36 million WLD tokens might flood the market under this scheme. Intriguingly, this scale of tokens doesn’t factor into the current circulating supply. Worldcoin documented that “the circulating supply of WLD will thus increase correspondingly,” as the token sales advance. The domino effect of this progression could ultimately cause Worldcoin’s circulating supply to balloon by 18.6%, culminating in a staggering over 229 million WLD tokens once the private sale concludes.

Now, while this may sound like a triumphant expansion, it’s presenting a significant predicament for WLD holders. They face the risk of their investments plummeting due to the potential impact on the coin’s price trajectory. Although Worldcoin acknowledged this concern, they attempted to minimize the fear by pointing out the weekly sale of between 500,000 and 1.5 million WLD tokens encapsulates “less than 0.1% to 0.4% of the current weekly trading volume.”

An additional strategy Worldcoin alluded to is the introduction of a 40-day lock-up period, an enforced restriction preventing trading firms from reselling WLD. This potential segment of their plan could temper the extreme volatility that an instant sell-off by these firms may activate.

WLD is the pivotal token of the Worldcoin project, which zeroes in on the digital verification of individual human identities via a device dubbed as the “Orb.” A brainchild of Open AI’s CEO, Sam Altman, Worldcoin made its debut last year. However, the venture has attracted controversy and skeptics, with Ethereum co-founder Vitalik Buterin leading the choir of those voicing privacy and legal apprehensions.

International authorities have subjected the project to meticulous scrutiny, investigating if its data gathering practices might infringe on privacy regulations. Worldcoin also reportedly ran afoul of Argentina’s National Consumer Protection Law, allegedly facing a $1.2 million fine.

Yet, even as they navigate regulatory hurdles, the most prominent reveal from Worldcoin’s announcement is their unwavering intent to innovate and grow. The blog post subtly implied that the proceeds from the token sale would be channeled towards catering to the global surge in demand for their orb-verified World IDs.

However, the road ahead seems thorny at present. At the latest report, Worldcoin’s stock is hovering around $5.4, trailing by over 6% in the last 24 hours, according to data extracted from CoinMarketCap. The fortunes of the ambitious blockchain project will no doubt be watched with bated breath by crypto enthusiasts. It now remains to be seen how these dramas unfold in this ever-unpredictable world of cryptocurrencies.