Officially launched on April 3, 2024 amidst crypto market crash, Wormhole commanded a total market capitalization of approximately 3 billion. Launched on OpenBook decentralized exchange based on Solana, it started trading at a price of $1.61. The bridging protocol distributed 674 million tokens valued at $896 million, amounting to 6.75% of the total supply, to eligible users through an airdrop. Nevertheless, the outcome was not as anticipated when a Wormhole (W) price experienced a 25% decrease following the airdrop. Let’s find out the reason why this happened.

Market Performance of Wormhole (W) Price

Starting with a price of $1.61 at launch on March 3,  2024, Wormhole (W) price closed at $1.3149. It is currently trading at $1.18, a decrease of 29.61% from its all-time high.  The price decline has pushed down it market valuation from $3 billion to $2.23 billion, positioning it at 207th in the market, according to CoinMarketCap. 

Wormhole also recorded a trading volume of $1.71 billion in the past 24-hours. Out of a total  supply of 10 billion W, the token has 1.8 billion W in circulation. 

Top Reasons Wormhole (W) Price Dropped

Various reasons contributed to price decline of Wormhole.

1. Phishing Scam

Crypto scammers, hackers, and meme-coiners have targeted the $850 million airdrop event by Wormhole, a cross-chain bridging platform that launched its governance token (W). The airdrop announcement faced scam accounts with “gold checkmarks,” as noted by blockchain sleuth ZachXBT.

Be careful there are tons of accounts with gold checkmarks in the replies posting phishing scams. pic.twitter.com/ioJufnktuP

— ZachXBT (@zachxbt) April 3, 2024

Founder Robinson Burkey’s account was also attacked with malicious links post-airdrop announcement, leading to its privatization. 

The presence of scams and hacking attempts in combination with the subsequent privatization of the founder’s account, could have created negative sentiment around the project and its token. Investors may have doubted the legitimacy or become cautious of the potential security risks of the project, leading them to sell off their holdings.

The W token debuted at $1.66 on OpenBook DEX with a market cap of $2.98 billion, now trading at $1.13 after over 20% drop. 674 million tokens were allocated for the airdrop, valuing it at $896 million for eligible users. Wormhole plans to expand the W token to the Ethereum network and other layer-2 networks in the future. 

2. Spoof Token “warmhole”

A spoof token called “warmhole” emerged immediately after the launch of Wormhole’s token airdrop. This may have contributed to the price decline of the token. Some memecoin developers seized the opportunity to create the parody token. The spoof token gained a significant 83,000% within six hours of its launch, rising from a market cap of  $100,000, recording a peak of $8.3 million in market value. This may have diverted traders’ and investors’ attention from the genuine Wormhole (W) token, resulting in a decrease of its demand. 

3. Fading of Initial Hype

The decline in the Wormhole (W) token’s price is primarily a result of the diminishing excitement that accompanied its launch. This decrease can be understood by a couple of main factors. A surge in demand and price is caused by investors purchasing new cryptocurrency projects at launch, driven by hype and profit expectations. Nevertheless, when the enthusiasm fades, certain investors choose to offload their assets, causing a price decrease, referred to as “buy the rumor, sell the news.” Moreover, the volatile nature of the cryptocurrency market results in market corrections as prices respond to the asset’s actual value.

Price decreases can be caused by investors selling for profit and momentum weakening after initial excitement. In the end, the drop in the price of the Wormhole (W) token is a normal correction as investors who were speculating reconsider their investments after the initial hype of the launch.

4. Global Crypto Market Crash

The launch of the Wormhole token via airdrop amidst a worldwide market collapse contributed to a 25% decrease in its value. Reasons for this drop include prevailing market sentiments, as investors are increasingly risk-averse and favoring capital preservation over speculative ventures. Worries about liquidity emerged as investors hurried to sell off assets, resulting in a shortage of buyers for the token. Investors quickly sold their tokens to minimize potential losses due to their risk aversion amidst market turbulence. 

The launch timing also decreased the token’s demand as investors were more concentrated on overseeing their current portfolios. 

Understanding Wormhole (W)

Wormhole is a protocol that operates across multiple chains, however, it first introduced W as an SPL token on the Solana network. The protocol helps with transferring assets and data across different blockchains.

The project highlighted the scalability, affordability of transactions, and quick processing times provided by the blockchain. It will soon grow to include Ethereum and its layer-2 solutions.

W is designed to function as a governance token for Wormhole, typically used for community tokens. The upcoming Wormhole DAO will function as a multi-chain DAO on Solana, Ethereum, and layer-2 networks.

The post Wormhole (W) Price : Top Reasons Why Wormhole (W) Price Dropped 25% appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am