Pump.fun (PUMP) Price Drops: Will a Relief Rally Save It?
Key Takeaways
Pump.fun's native token, PUMP, declined 6.5% to $0.00276, accompanied by a 25% increase in trading volume. This suggests heightened bearish activity. Revenue also took a hit, dropping from $2.59 million to $1.41 million. Interestingly, exchange reserves saw a 12.4% decrease, potentially signaling accumulation.
PUMP has been on a downward trajectory for the past three days, and the bearish trend may continue. This negative outlook is influenced by weak market sentiment, decreasing revenue, and general market headwinds.
The increased trading volume coinciding with the price decrease indicates substantial selling pressure. This bearish momentum may persist until overall market sentiment improves.
Why is PUMP's Price Falling?
Market uncertainty appears to be a primary driver. Major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) experienced declines of 3.5% and 4.25%, respectively, impacting the broader altcoin market and causing a 3.07% dip in the total market capitalization.
Another contributing factor is the continuous decline in Pump.fun's revenue. The revenue generated on August 13th was $2.59 million, which has since decreased to $1.41 million. This revenue is used to buy back PUMP tokens, and its decline has coincided with the token's price decrease.
Source: DefiLlama
Exchange Reserves Indicate Potential Accumulation
Despite the bearish indicators, a decline in exchange reserves offers a glimmer of hope. Nansen data shows a 12.43% decrease in PUMP exchange reserves over the last 30 days. A decrease in exchange reserves often suggests accumulation by long-term holders, which can positively influence sentiment in the long run.
Source: Nansen
Technical Analysis: Key Price Levels to Watch
Technical analysis suggests PUMP may be headed for another price drop. The token recently tested a key support level at $0.00276. For the past 13 days, the price has consolidated between $0.00273 and $0.0032, facing resistance from a descending trendline, indicating a bearish bias.
Source: TradingView
On the four-hour chart, PUMP is near the neckline of a potential double-bottom formation. A breakdown below $0.0027 could lead to a 20% decline, targeting $0.0022.
Source: TradingView
Conversely, a relief rally could occur if PUMP closes a four-hour candle above $0.0032.