Pump.fun Token Drops 15% Amid Market Competition

The Pump.fun (PUMP) token, which recently concluded its Initial Coin Offering (ICO), has experienced a significant price drop of over 15% in the last 24 hours, trading at approximately $0.004355 on Saturday, July 19. Despite this decline, there is a notable surge in activity within the futures market, indicating that many traders are optimistic about a potential recovery.

The PUMP token's price has fallen below its listing price of $0.00543, but it has yet to drop below the ICO price of $0.004, which serves as a critical support level for the majority of buyers. This support level is crucial as it represents the price at which many investors initially purchased the token, and a drop below this level could signal further declines.

The Pump.fun project has raised over $500 million, which is essential for supporting its future operations, including token buybacks. The project has introduced a creator fees program to reward token holders who contribute value to the memecoin ecosystem. The first beneficiary of this program was X user Ricco, who built the Chill House page dedicated to the Chillhouse meme.

However, the Pump.fun platform is facing intense competition from the BONK meme-backed LetsBONK.fun. This competition has led to a significant market share for LetsBONK.fun, which recorded a 24-hour trading volume of about $759 million, capturing 55% of the market share on the Solana network. In contrast, Pump.fun posted a 24-hour volume of $519 million, securing 37% of the market share.

The PUMP token's price has slipped below a crucial support level following its 15% drop in the past 24 hours. The altcoin formed a double-top, coupled with bearish divergence of the four-hour Relative Strength Index (RSI). With the PUMP price having respected a falling logarithmic trend, the midterm bearish sentiment is likely to persist. The bearish sentiment will be invalidated if PUMP price consistently closes above $0.0067.

Despite the current price drop, the PUMP token has accumulated bullish aspects. The gradual increase in its Open Interest (OI) signals a rise in demand from speculative traders. Additionally, the PUMP token has recorded more positive funding rates in the past week, which is associated with bullish sentiment. This suggests that while the price may drop further in the coming weeks amid a macro bullish outlook, it could rebound later.