WLFI is caught in a vortex: After freezing 3 billion Tokens from Justin Sun, market capitalization Fluctuation intensifies, internal personnel profit 20 times, retail investors are badly played for suckers.

World Liberty Financial governance token WLFI has experienced severe fluctuations. After the project party froze nearly 3 billion tokens from Junstin Sun's related wallet, the price briefly surged by 8%, but then continued to fall, raising market concerns. This article provides an in-depth analysis of WLFI, from the internal sell pressure during its initial issuance, the manipulation controversy involving Junstin Sun, to the market reaction to the latest token burning measures, revealing the risks and opportunities of this Trump concept token for investors.

Freezing Storm: 3 Billion Tokens Locked, Triggering a Liquidity Turmoil

World Liberty Financial governance token WLFI rose 8% on Tuesday, with a market cap increase of about 400 million dollars, after the project party froze the tokens held by cryptocurrency entrepreneur Junstin Sun. This move locked up nearly 3 billion tokens, drastically changing the liquidity situation of the token after its volatile issuance days.

According to the project party announcement, Justin Sun's Wallet address has been blacklisted, freezing 540 million unlocked WLFI Tokens (worth approximately 101 million USD) and 2.4 billion staked Tokens (worth approximately 452 million USD). A total of 2.94 billion Tokens have been frozen. This decision was made following allegations of systematic selling of user deposits by related exchanges to suppress the market. Reports indicate that core project leaders and several major exchanges were involved in the decision-making process.

The freeze immediately tightened the circulating supply, curbing potential selling pressure and pushing the price back above $0.18. This surge provided temporary relief for investors who were impacted during the brutal issuance, as insiders sold nearly 700 million tokens within hours of the trading start.

Issuance Chaos: Insiders Profit 20 Times, Retail Investors Bear Losses

World Liberty Financial launched its Token for the first time on September 1 at an initial price of $0.46. Within two hours, a large sell-off on platforms like Gate drove the price down to $0.25. Early supporters who purchased Tokens at prices of $0.015 and $0.05 during the presale exited with returns as high as 20 times their investment, while retail investors bore the losses.

The economic model of the token has drawn criticism. Approximately 56% of the supply is controlled by insiders, while entities linked to Trump retain 22.5 billion tokens and the rights to 75% of the project's revenue. Despite being marketed as a decentralized Trump support initiative, critics argue that the structure points to centralization.

Justin Sun participated earlier this year, investing $75 million, and was subsequently appointed as an advisor. Data from Arkham Intelligence shows that he recently claimed $178 million worth of unlocked WLFI, bringing his total holdings close to $900 million before the freeze. On-chain movements also showed transactions between his Wallet and associated exchanges. These activities have sparked allegations of market manipulation, although Justin Sun has denied them.

Market Reaction: Token falls 41%, whales suffer heavy losses

In a statement, he argued that his address only conducted “very low amount general exchange deposit tests” and denied that any activities could affect the price of WLFI. However, his wallet being blacklisted marks a significant escalation in the controversy. The official account of WLFI attempted to quell concerns, clarifying that the tokens in the project-controlled wallet are managed by community voting, rather than being decided by the team alone.

The organization emphasizes that allocations can only be deployed through on-chain proposals approved by holders. The freeze has also raised issues for investors regarding redemption. Analysts point out that if HTX sells WLFI deposits in the current lack of liquidity for Justin Sun's tokens, users seeking to recover assets may need to repurchase them on the open market.

The controversy marks the end of WLFI's turbulent start. Before its issuance, derivative trading associated with the token surged, with Coinglass reporting a 530% increase in 24-hour trading volume, reaching $3.95 billion. Open interest skyrocketed by over 60% to $931.9 million, as traders speculated on assets related to Trump. By the time spot trading began, WLFI's fully diluted valuation briefly touched nearly $40 billion, placing it among the top 50 cryptocurrencies.

However, the ongoing sell-off quickly depressed prices. By September 2, the trading price of WLFI was $0.24, with a market cap slightly below $7 billion. According to data from CMC, the token subsequently fell to around $0.18, down 41.7% from its issuance price, and down 18.8% in the past 24 hours. Despite the market turbulence, the WLFI team insists that its governance framework will allow the community to guide future decisions.

Self-Rescue Measures: Burning 47 million Tokens Cannot Stop the Fall

World Liberty Financial burned 47 million tokens in the first week of trading in an attempt to stabilize the market shaken by severe losses. On-chain data shows that these tokens, equivalent to 0.19% of the circulating supply, were sent to a verified burn address on Wednesday. Prior to this action, WLFI had sharply dropped 31% from an issuance price of $0.33 to just above $0.23.

The team also proposed a broader repurchase and token burning plan funded by protocol fees, which requires community voting. The initial debut of WLFI was similar to an initial public offering, opening spot trading for the first time after investor voting in July. The trading volume exceeded $1 billion in the first hour on Binance and other exchanges. The price briefly touched $0.30, valuing the Trump family's nearly 25% stake at over $6 billion. With WLFI's value plummeting by 41% in less than a week, this paper wealth has already shrunk.

The giant whale bore the impact of the fall. Blockchain data shows that Wallet 0x432 lost over $1.6 million after re-entering WLFI with leverage, wiping out a profit of $915,000 gained just hours earlier. Another large holder, Wallet 854RaR, saw a drop of $650,000 on a $2 million position, while Wallet 0x1527 faced over $2.2 million in unrealized losses. Some traders profited from the sell-off, including Wallet 0x92bb, which made $1.8 million through shorting.

The token burning failed to reverse the trend. Within 24 hours of the announcement, WLFI fell an additional 18%, exacerbating bearish sentiment. Critics argue that while this strategy may alleviate short-term pressure, it highlights the fragility of celebrity-driven cryptocurrency projects. As WLFI attempts to shift from speculation to utility, investor confidence remains shaky, and the whales are calculating significant losses.

Derivatives Market: $139 Million Capital Outflow Intensifies Fall

Key points indicate that WLFI experienced a large-scale liquidity outflow in the past day, driven by derivatives investors, with overall trading volume declining. As sentiment weakens, the asset may face further outflows. World Liberty Finance [WLFI] has been on a downward trend in the past day, leading the market decline with a fall of 9.9%. Liquidity outflow remains the main driver of the decline, with short sellers taking profits while bulls face pressure.

Analysis shows that the recent fall of WLFI was driven by derivatives investors. The open interest data indicates an outflow of 139 million dollars over the past day, followed by a 20% decline. This outflow in the derivatives market suggests that investors are deliberately closing their positions as they believe the market is highly volatile and wish to avoid liquidation risks. Meanwhile, the overall trading volume has sharply decreased. Trading volume dropped by 994 million dollars over the past day, down to 5.14 billion dollars. When both price and trading volume decline simultaneously, it indicates weak market momentum and increases the likelihood of further falls in the upcoming trading sessions.

Investor Sentiment: Long Liquidations Dominate

Investor activity has been predominantly bearish. Data shows that the bulls have suffered most of the liquidations. Out of a total liquidation of 19.05 million USD, the bulls accounted for 15.05 million USD, while the bears only represented 4.79 million USD, indicating that the bears are still more profitable. On-chain sentiment reflects the same situation. According to Lookonchain data, a whale holding a short position made 2.2 million USD on WLFI, while a bull whale lost 1.8 million USD during the same period.

In the spot market, sentiment initially leaned towards bullish, but this optimism has faded under bearish pressure. In context, buying power reached $6.5 million at 5:00 AM (UTC+1), but plummeted to $456,280 by the time of publication, indicating a significant slowdown in the purchasing pace of early buyers. AMBCrypto reviewed the charts of the asset and found that WLFI may soon enter a price discovery phase.

Technical Analysis: Entering the Price Discovery Phase, Downward Risks Intensify

(Source: TradingView)

The chart looks bearish, and WLFI failed to hold the support level of $3.23 on Thursday, forcing the token into a price discovery phase. Price discovery is essentially a stage where an asset continually sets new targets. However, in this case, the trend favors the bears, indicating that unless there is significant bullish inflow to support long positions, WLFI may continue to move lower.

As of now, traders have made their stance clear. Sentiment remains bearish, outflows are increasing, and spot funds have sharply declined—bullish investors should prepare for more pressure.

Conclusion: Trump Concept Token Faces Severe Challenges

The dramatic fluctuation of the WLFI Token fully exposes the inherent risks of celebrity-backed cryptocurrency projects. From insiders making huge profits to cash out, to the manipulation controversy involving Justin Sun, and the emergency freezing and token burning measures taken by the project party, this series of events points to significant flaws in the governance mechanism and token economic model.

For investors, the case of WLFI serves as a reminder to be cautious of governance tokens issued at high valuations, especially when the project exhibits obvious centralization characteristics and internal personnel interest biases. Although the endorsement of the Trump concept brings short-term attention, the long-term value still needs to return to the project's actual utility and community governance capabilities.

The current market sentiment is clearly leaning towards caution, with outflows of funds from derivatives and a slowdown in spot buying indicating that investors are reassessing the reasonable valuation of the Token. It is advisable for investors to adopt a wait-and-see approach and make investment decisions only after clearer signals of fundamental improvement and signs of technical stabilization.