Key Points
Due to a large sell-off by major holders, the PUMP token has fallen by over 40%. Despite the bearish market sentiment, exchange outflows and an oversold RSI indicate that accumulation and a rebound may occur.
Recently launched Pump.Fun [PUMP] has seen a significant drop, falling below its initial coin offering (ICO) price.
According to data from CoinMarketCap, the token has lost over 40% of its value since its launch and continues to decline.
Why is PUMP's price falling?
As of the time of writing, the asset has fallen again by 15%, trading at $0.00368. During this period, trader and investor participation has increased.
CoinMarketCap data shows that PUMP's 24-hour trading volume has increased by 32% compared to the previous day, reaching $721 million.
The rise in trading volume and the decline in price suggest strong bearish momentum, further indicating that this downward price momentum may continue in the coming days.
Recently, a cryptocurrency expert shared a data report indicating that profit-taking is the main reason for the continuous decline in price.
Source: CoinMarketCap
According to experts, due to the massive sell-off by top holders, PUMP has fallen below its private placement price of $0.004.
One investor bought 25 billion PUMP for $100 million and has now sold 17 billion. Another investor previously bought 12.5 billion PUMP and has now sold all for $14.31 million.
The massive sell-off by major holders may be a key driving factor behind the continued decline in PUMP's price.
$2.16 million outflow of PUMP, is it a sign of accumulation?
In this downturn, some investors and long-term holders began to seize the opportunity to significantly increase their holdings.
On-chain analytics firm CoinGlass reports that in the past 24 hours, global exchanges recorded a PUMP token outflow of $2.16 million.
In the current market sentiment, such outflows from exchanges indicate a potential accumulation, which may alleviate selling pressure and help limit further price declines.
Source: CoinGlass
However, trader sentiment remains unchanged as they continue to short.
Data shows that at the time of publication, PUMP's long-short ratio is 0.88, indicating strong bearish sentiment among investors.
It is worth noting that only 47% of traders hold long positions, while 53% hold short positions.
Source: CoinGlass
Combining these indicators, it seems that bears dominate the asset; however, potential PUMP accumulation may slow the pace of price decline.
PUMP's price action and technical analysis
Now, the key question is whether PUMP will recover or continue to decline.
AMBCrypto's technical analysis shows that PUMP is currently in a downtrend, but seems to be forming a bullish price action pattern.
Source: TradingView
According to recent price trends, the four-hour chart shows PUMP forming a bullish descending wedge pattern between its lower and upper boundaries.
As of the time of writing, the price is close to the lower limit, indicating that an upward momentum may be imminent.
However, the trend may only change if PUMP breaks above this bullish pattern and closes above $0.0042.
The asset's relative strength index (RSI) is 32, indicating that it is in the oversold zone and a price rebound or upward momentum may be imminent.