PUMP's Rally: Can It Reach $0.004 as Supply Drops by 45 Billion Tokens?

Pump.fun has managed to maintain its support at $0.003, recovering from a drop to $0.0025 and recently hitting a peak of $0.0033. As of now, PUMP is trading at $0.003291, marking a 16.32% increase on the daily charts, with a notable 40% surge in trading volume.

Key Takeaways

PUMP maintains support at $0.003 after a brief drop.
Amid decreasing inflows for most altcoins, demand for Pump.fun has remained strong.
Buyers have dominated the market for 18 out of the last 30 days, indicating strong accumulation.
Supply on exchanges fell from 38 billion to 33 billion, a significant reduction since September.
Team buybacks have removed over 45 billion tokens from circulation, creating a deflationary effect.
Short-term momentum indicators are improving, suggesting potential for higher prices.

Analyzing Pump.fun's 16% Rally: Is $0.004 Target Within Reach for PUMP?

Market Dynamics: Buyers Remain in Control

Despite recorded declines in inflows across most altcoins, Pump.fun has shown a steady demand. According to data from Coinalyze, buyers have taken control for 18 out of the past 30 days this month. This positive trend is reflected in December’s Buy-Sell Delta, which has shifted significantly from the market dynamics observed at the end of November.

pump buy sell volume

In the last month, the spot Buy Volume reached 20.18 billion compared to Sell Volume of 17.86 billion, resulting in a Buy-Sell Delta of 2.32 billion. This indicates ongoing accumulation in the Spot market. Additionally, PUMP’s supply on exchanges has steadily declined, dropping from 38 billion to 33 billion in just two weeks.

Pump.fun holdings on exchanges

This represents a significant reduction in supply, following a broader decline since September when balances were near 72 billion. The consistent withdrawal of tokens from exchanges by both retail and larger investors is tightening the circulating supply, contributing positively to price recovery.

Support from Team Buybacks

The resilience demonstrated by Pump.fun can also be attributed to the team’s ongoing token buybacks. In the last day alone, they spent $1.15 million on buybacks, raising the total to $195 million according to Blockworks.

Pump.fun buyback

This effort has effectively removed 45.5 billion tokens from circulation, restricting the available supply for sale. Such consistent buybacks are driving a deflationary squeeze, helping stabilize market conditions even during periods of volatility.

Analyzing Momentum Indicators

As demand increases alongside buybacks, PUMP’s short-term momentum has strengthened. The Stochastic Momentum Index increased from -2.2 to 39, moving out of an oversold position and indicating growing buyer interest.

PUMP RVGI & SMI

Meanwhile, the Relative Vigor Index has risen to 0.165, suggesting improved market strength. This development is leading traders to focus on whether buyers can maintain their dominance as they approach the next resistance levels.

If accumulation persists, PUMP may retest the $0.0037 mark and potentially aim for $0.004. However, should there be a failed breakout or profit-taking, the token could fall back toward a support level around $0.0028.

Conclusion

The dynamics surrounding PUMP are showing potential for further growth, thanks to sustained buyer interest, strategic buybacks, and declining supply on exchanges. As the market watches closely, it will be interesting to see if PUMP can break through its current barriers and reach new highs.