Pi Network price has formed a bearish setup just as roughly 9 million tokens are set to be unlocked on Thursday, Dec. 25. This could lead to renewed selling pressure on the token.

After hitting a November high of $0.279, Pi Network (PI) fell 31% to an annual low of $0.192 last week. 

While it managed to recover to $0.214 over the weekend amid dip buying, demand for the token was once again dampened, and fell to $0.203 when writing, as investors remained in a wait-and-watch mode ahead of the release of the US initial jobless claims data.

Investor demand also faltered due to the 8.7 million PI token unlock worth $1.76 million set for tomorrow, Dec. 25, data from PiScan shows. It stands as the largest token unlock for this month, which is still set to see nearly 54.7 million tokens released into circulation in total, worth around $11.07 million.

Large token unlocks such as this reduce the scarcity of the token and tend to put more selling pressure on the price, especially if not met with immediate buying demand to absorb the excess supply.

The token unlock event comes just a week after the Pi core development team revealed two announcements surrounding Pi Network that aim to strengthen its DeFi infrastructure and expand real-world usage.

As such, if these initiatives manage to drive meaningful engagement and boost ecosystem activity, they could help abate some of the selling pressure generated by the token unlocks.

Pi Network price analysis

In the meantime, technical signals have also started flashing warning signs.

On the daily chart, Pi Network price has formed a double top pattern since late October. The classic bearish reversal pattern has formed with the tops around $0.285 and the neckline at the $0.192 to $0.196 zone. Typically, when this pattern is confirmed, notable price declines tend to follow.

As of now, momentum indicators also appear to highlight a bearish outlook in the short term. Notably, the Supertrend has flashed a red signal as it moved above the price, a sign that bears have regained control over the market.

Furthermore, the MACD lines have failed to break above the zero line and point to more consolidation or downside ahead.

As such, if PI fails to hold the neckline support region, it could lead to a crash to $0.153, down nearly 24% from the current price. However, a potential rebound from the neckline zone could invalidate the setup and point to a potential recovery ahead.