The Wasabi plant itself does not have a pungent flavour.
The pungent component, which is contained in Wasabi's cells, is a substance called Sinigrin. Sinigrin itself is not pungent, but rather bitter. Through the process of grating, the cells in Wasabi are broken down and the Sinigrin and enzymes (Myrosinase) come into contact, creating the pungent effect. The enzymes start functioning when mixed with water, which is why Wasabi powder becomes pungent when water is added. This component evaporates easily, so that we feel the effect straight after tasting Wasabi. The 'zing' you feel in your nose is one of the unique characteristics of Wasabi, and it is a perfect match for raw fish.
Wasabi reaches the peak of its flavour and pungency in 1-3 minutes after grating, or mixing with water. The pungent flavour evaporates very quickly after that.
Try adding lemon juice / Vitamin C and mix the paste again. The pungent taste is created by re-hydrolyzing the Sinigrin which was originally broken down.