PUMP Drops 30% as $6.3 Million Whale Exits – Is This the Turning Point?

The cryptocurrency Pump.fun (PUMP) has seen a significant decline after failing to maintain its recent upward trend. A notable sell-off by a large holder, often referred to as a "whale," has contributed to the sustained downward pressure on the asset. Despite attempts at buybacks by the Pump.fun team, the outlook remains uncertain.

Key Takeaways

PUMP recently dropped 30% and is currently priced at $0.002754.
A major whale sold approximately $6.3 million worth of PUMP, realizing losses over $5 million.
Positive Spot Netflow indicates increased exchange inflows, heightening short-term selling risks.
The Pump.fun team continues daily token buybacks but has not yet reversed the overall bearish trend.
Momentum indicators suggest ongoing downside pressure, with risks of further declines.

Pump.fun [PUMP]

PUMP's Recent Downtrend

Pump.fun has experienced a deeper downtrend after struggling to sustain the momentum it generated from a recent peak. After hitting a high of $0.0048 a month ago, PUMP has been trading within a descending channel, touching a local low around $0.0025. At the time of writing, PUMP is valued at $0.002754, reflecting a daily decline of 3.85% and a monthly drop of 30.4%, which indicates a persistent selling pressure, particularly from larger holders.

Pump whale deposit Source: Arkham

Significant Whale Activity

Recent on-chain analysis revealed that a prominent whale closed their positions at a substantial loss. Data from Arkham shows that this whale sold off $6.3 million worth of PUMP across two wallets. One wallet liquidated 1.17 billion PUMP for approximately $3.21 million, while another one sold 1.129 billion PUMP for roughly $3.11 million. This whale had been accumulating PUMP over a three-month period, starting just before the asset's all-time high.

As the price declined, the whale continued to buy the dips before ultimately exiting during the latest market downturn. With PUMP's price down over 50% from its peak, this whale absorbed losses exceeding $5 million, or about 50% of their investment. Historically, when prominent holders sell at a loss, it may reflect waning confidence and expectations of further price declines.

Pump spot netflow Source: CoinGlass

Changes in Exchange Dynamics

The selling pressure from whales has also influenced crypto exchanges. According to CoinGlass, the Spot Netflow for Pump.fun turned positive after a substantial shift in trading flows. At the current moment, the Spot Netflow is approximately $509,000, up from -$1.28 million the previous day. An increase in positive Spot Netflow generally indicates rising inflows to exchanges, potentially increasing near-term selling risks in a weak demand environment. Traders are now closely watching whether internal buy-side support can mitigate this pressure.

Continuous Buybacks Amidst Market Stress

Despite these challenges, the Pump.fun team has persisted with token buybacks. They have been actively purchasing tokens every day throughout December. Just in the last 24 hours, for instance, they bought 436.9 million PUMP worth about $1.2 million.

Pump.fun token buybacks Sources: Fees.Pump.fun

In total, the buybacks for December have reached approximately $12.7 million. Although these buybacks have absorbed some of the sell-side flow, they have not managed to reverse the broader market trend. The price movements suggest that buybacks alone may be insufficient to create a sustained rebound.

Oversold Conditions Yet Ongoing Risks

Current momentum indicators show that PUMP is under persistent selling pressure. The Stochastic RSI for PUMP has dropped to 21, indicating that the token is in oversold territory; however, this often signifies strong seller control rather than an imminent reversal.

PUMP stoch RSI & EMA Source: TradingView

If the selling trend continues, PUMP risks falling below the crucial support level at $0.0025. In order to weaken the bearish sentiment, buyers will need to reclaim the EMA20, situated around $0.0029. Achieving this could potentially lead to a recovery towards EMA50, which is around $0.0034.

Conclusion

As Pump.fun continues to experience significant challenges in the market, the recent actions of large holders and the ongoing buyback efforts are key factors to watch. Whether these dynamics will lead to a turning point for PUMP remains to be seen, but players in the market need to remain cautious as the situation evolves.