In the latest episode of The Market Report, analyst and writer Marcel Pechman discusses the Worldcoin token launch, why it is controversial, and the differences between it and most altcoins. According to the analysis, investors should take time to understand the project before even considering an investment.
Looking at the tokenomics of the Worldcoin token, launched on July 24, there are two absolute outliers. Firstly, the extremely high volume overtook the market cap, as the token reportedly traded 1.6 times its entire capitalization in the first 24 hours. How’s that even possible?
According to Pechman, one must understand that the project has lent 100 million tokens to market makers. Only 8 million coins were handed out to users, who may or may not have flipped their positions, but this does not justify the $400 million reported volume.
Now, on to the second part of the story, which Pechman finds even more concerning. Some 40% of the tokens will be unlocked between July 2024 and July 2025, and that’s 500x more than the 8 million currently awarded to users via airdrop.
Ultimately, to maintain a market capitalization below Chainlink, for example, at $4 billion, the Worldcoin token price in July 2025 would have to be below $1, or 58% below the current level.
That’s a huge risk for traders who are trying to capture 20% gains in the short term, given that there’s a huge amount of tokens from venture capitalists that paid much lower prices.
Now, on to the show’s next topic: Pechman explores the Deribit Bitcoin volatility index, which reached its lowest level in two years. According to some analysts, that indicates a possible lack of price turbulence for Bitcoin (BTC) in the near future. But there’s a catch here, according to Pechman, as he does not believe the most likely outcome is lateral movement for Bitcoin.
Want to know the rationale behind Pechman’s counterintuitive reading for the volatility indicator and how to position in this situation? Get those answers in the latest The Market Report, a show that runs exclusively on the new Cointelegraph Markets & Research YouTube channel.