No Ties to OpenAI: Worldcoin Drops 9% as Top Trader Issues Warning

Worldcoin (WLD) has plummeted by nearly 9% within 24 hours, settling at around $5.20. This drop follows a critical analysis by DeFi^2 (@DefiSquared), the top trader on the crypto exchange Bybit, who warned of significant inflationary pressures and misleading marketing tactics associated with Worldcoin.

The decline comes shortly after OpenAI, the creator of ChatGPT, announced its new AI model, GPT-4o, which can engage in lifelike voice conversations and interact seamlessly across text and images. Typically, Worldcoin benefits from OpenAI announcements, but this time, WLD's price has dropped.

Why Worldcoin is Plummeting

DeFi^2, in an analysis shared on X, detailed the rapid devaluation of Worldcoin, attributing it to substantial daily depreciation driven by emissions and strategic sales by the Worldcoin Foundation. The token's value is reportedly declining by 0.6% daily due to emissions related to grant and operator claims, which are mostly sold off immediately, increasing downward pressure on the price.

Additionally, the Worldcoin Foundation's plan to sell $200 million worth of Worldcoin to trading firms will boost the circulating supply by 18%. DeFi^2 criticized this move, noting that tokens attributed to a "Community" allocation are being sold at a discount to entities that might not prioritize the broader community's interests, potentially diluting value for existing holders.

A critical future issue highlighted by DeFi^2 is the upcoming unlocks for venture capital and team-related tokens, set to begin in 70 days. He predicts the supply of Worldcoin will inflate at an alarming rate of 4% per day due to these unlocks combined with ongoing emissions. This could result in nearly $50 million worth of sell pressure daily, severely impacting the token’s market price and stability.

DeFi^2 also addressed misconceptions about Worldcoin’s association with notable tech figures and organizations, clarifying that Sam Altman of OpenAI is not actively involved with Worldcoin, which operates independently. This clarification counters a common misconception that may have misled investors.

Moreover, DeFi^2 compared Worldcoin's tokenomics to "predatory" economic models designed to benefit early investors and insiders at the expense of retail investors. He noted similar strategies have been used in the crypto industry, where manipulation of token supply and market conditions allowed insiders to gain significantly while exposing regular investors to increased risks and losses.

“Worldcoin might become the greatest transfer of wealth of this entire cycle. Unfortunately, this wealth transfer isn’t in the form of universal basic income as their mission suggests, but instead to the pockets of the team and insiders,” DeFi^2 stated. He added that “the manipulative low float/high FDV design is straight out of the SBF playbook, enriching insiders as they hedge their locked allocations at high valuations pre-unlock via perps/OTC; yet retail investors sadly still think they’re beating the system by pushing the price up.”

Following DeFi^2’s warnings, trading activity surged to $666 million (up 104% in the last 24 hours) as investors and speculators reassessed their positions in Worldcoin. At press time, WLD traded at $5.24.

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