PUMP faces double-bottom test: Relief rally only above…
PUMP's price inches closer to 20% fall, will it happen?
Key Takeaways
Pump.fun slipped 6.5% to $0.00276 as trading volume rose 25%. Revenue dropped from $2.59 million to $1.41 million, while Exchange Reserves fell 12.4%, hinting at accumulation.
For three straight days, Pump.fun [PUMP] has been plunging, with signs that the decline could extend further. The bearish outlook was fueled by weak sentiment, falling revenue, and broader market pressure.
At press time, PUMP slipped 6.5% in the past 24 hours to $0.00276. This downside momentum has triggered massive participation from traders and investors, resulting in a 25% surge in trading volume.
This surge in trading volume during the price decline hinted at strong bearish momentum in the asset, which may continue until market sentiment shifts.
Why is the PUMP price falling?
The potential reason behind this outlook is market uncertainty.
Bitcoin [BTC] dropped 3.5% and Ethereum [ETH] fell 4.25% in the past 24 hours. Naturally, this weighed on altcoins, with the total market cap dipping 3.07%.
Apart from this, another major bearish factor is Pump.fun’s revenue, which has been continuously declining.
On the 13th of August, Pump.fun generated a total revenue of $2.59 million, but has since slid to $1.41 million. This revenue, used to buy back PUMP tokens, declined alongside the price.
Exchanges see reserves drop
Apart from the bearish outlook, the only factor supporting the PUMP token is the decline in exchange reserves.
Nansen data showed exchange reserves for PUMP fell 12.43% over the past 30 days.
On top of that, a decline in Exchange Reserves often signals accumulation by holders, which could aid long-term sentiment.
Pump.fun price action and upcoming levels
AMBCrypto’s technical analysis suggested PUMP was close to another leg down. On the daily chart, the token tested a key support at $0.00276.
For six consecutive sessions, the price consolidated between $0.00273 and $0.0032. However, the asset continued to face resistance from a descending trendline.
Taken together, the past 13 days of action pointed to a bearish bias.
On the four-hour chart, PUMP hovered near the neckline of a double-bottom formation. Having said that, a breakdown under $0.0027 could expose the token to another 20% drop, targeting $0.0022.
Conversely, a quick relief rally was possible if the memecoin closed a four-hour candle above $0.0032.
