Compass Point Flags Liquidity and Valuation Risks in WLFI Listing
US investment bank Compass Point has warned retail investors about the upcoming listing of the Trump-backed WLFI token. Analysts highlight a severe supply shortage: only a fraction of WLFI’s total supply will be tradable at launch, while over 20% remains locked up and held by insiders, including former President Trump’s family. This structure creates low liquidity and a high fully diluted valuation (FDV), inflating on-paper value. Compass Point cautions that exchanges such as Coinbase may list WLFI with an excessively high FDV, leading to overvaluation and exposing traders to significant losses. The bank draws parallels with January’s Official Trump (TRUMP) memecoin listing, where many retail investors suffered due to aggressive pricing on limited circulating supply.
Bearish
Compass Point’s warning underscores critical liquidity and fully diluted valuation risks at WLFI’s debut. Past events, such as the Official Trump (TRUMP) memecoin launch, saw retail investors lose funds when exchanges priced tokens aggressively despite limited circulating supply. This pattern suggests traders may face sell-pressure and price corrections shortly after listing. In the long term, ongoing trust issues and a high insider lockup ratio could dampen demand, keeping WLFI undervalued relative to its FDV. Overall, the warning is likely to prompt caution, reduce speculative inflows, and exert downward pressure on the token’s market performance.