Wormhole It was officially released on April 3, 2024. Additionally, it has a total market value of approximately 3 billion. The token was launched on the OpenBook decentralized exchange based on Solana. In addition, it started trading at a price of $1.61. The bridge protocol distributed 674 million tokens worth $896 million, representing 6.75% of the total supply, to eligible users via an airdrop. However, the outcome was not as expected as the Wormhole (W) price experienced a 25% drop following the airdrop. So what is the reason for this? The reasons for this are included in the rest of the news.
Market Performance of Wormhole (W) Price
Wormhole (W) price, which started at $1.61 on March 3, 2024, closed at $1.3149. It is currently trading at $1.18, a decline of 29.61% from its all-time high. According to CoinMarketCap, the price drop reduced its market valuation from $3 billion to $2.23 billion, positioning it at 207th in the market.
W also recorded a trading volume of $1.71 billion in the last 24 hours. Of the total 10 billion W supply, 1.8 billion W is in circulation.
The Most Important Reasons for the Fall in Wormhole (W) Price
Several reasons contributed to Wormhole’s price decline.
1. Phishing Scam
Crypto scammers, hackers, and meme-coiners targeted the $850 million airdrop event of cross-chain bridging platform Wormhole, which launched its governance token (W). Airdrop announcement faces scam accounts with “golden checkmarks,” as blockchain detective ZachXBT notes stayed.
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 hacked with malicious links following the airdrop announcement. This led to the privatization of the account.
The existence of scams and hacking attempts, along with the subsequent privatization of the founder’s account, may have created negative sentiment around the project and its token. Investors may have doubted the legitimacy of the project or were wary of potential security risks and sold their holdings.
The W token debuted at $1.66 on the OpenBook DEX with a market cap of $2.98 billion. Additionally, it is currently trading at $1.13 after a decline of more than 20%. 674 million tokens were allocated for the airdrop, valuing $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. Fake Token “warmhole”
Immediately after the launch of Wormhole’s token airdrop, a fake token called “warmhole” appeared. This may have contributed to the decline in the token price. Some meme coin developers have seized the opportunity to create parody tokens. The fake token gained a significant 83,000% in value within six hours of its launch. Additionally, it increased from a market cap of $100,000 to a market cap of $8.3 million. This may have diverted the attention of traders and investors from the actual Wormhole (W) token, leading to a decrease in demand.
3. Initial Excitement Weighs Down
The decline in the price of the Wormhole (W) token is primarily a result of the waning excitement that accompanied its launch. This decline can be understood by several main factors. The increase in demand and price is due to investors purchasing new cryptocurrency projects with excitement and profit expectations when they are launched. However, when enthusiasm wanes, some investors choose to divest their holdings, causing a price decline referred to as “buy the rumor, sell the news.” Moreover, cryptocurrency The volatile nature of the market results in market corrections as prices react to the intrinsic value of the asset.
Price declines may occur as investors sell for a profit and momentum wanes after initial excitement. In the end, the drop in Wormhole (W) token price is a normal correction as speculating investors reconsider their investments after the initial excitement of the launch.
4. Global Crypto Market Crash
The release of the Wormhole token via airdrop in the midst of a worldwide market crash contributed to a 25% drop in its value. Reasons for this decline include prevailing market sentiments as investors become increasingly risk averse and prefer preservation of capital over speculative ventures. Liquidity concerns emerged as investors rushed to sell their assets. This caused a shortage of buyers for the token. Investors quickly sold their tokens to minimize potential losses due to their risk aversion amid market turbulence.
The timing of the launch has also reduced demand for the token as investors focus more on monitoring their existing portfolios.
What is Wormhole?
Wormhole is a protocol that works on multiple chains. However, Solana first introduced W as an SPL token on its network. The protocol helps transfer assets and data between different blockchains.
The project emphasized the scalability, affordability of transactions and fast transaction times provided by blockchain. Soon Ethereum and will grow to include layer-2 solutions.
W is designed to function as a governance token for Wormhole, which is typically used for community tokens. The upcoming Wormhole DAO will function as a multi-chain DAO on Solana, Ethereum and layer-2 networks.
