TRUMP Token Unlock Sparks 28% Rally, Whales Face Critical Decision

The recent unlocking of 3.5 million TRUMP tokens has sparked debate among market analysts and investors about whether this move is a strategic liquidity play or a risky maneuver that could backfire. The developers of TRUMP timed this liquidity event to coincide with a broader market recovery, aiming to capitalize on the bullish sentiment. This strategic timing provided whales with an opportunity to enter the market at a favorable price point.

On-chain data reveals that several large wallets accumulated TRUMP tokens during the recent price surge. However, the average cost basis of these wallets remains above the current spot price of TRUMP, creating a critical juncture. The question now is whether these whales will maintain their conviction and continue to hold, or if they will distribute their holdings, potentially turning the recent price pump into a liquidity trap.

The TRUMP team's decision to funnel 3.5 million tokens back into exchanges has been flagged by on-chain analysts. This move aligns with the memecoin sector's recent market cap surge, which has pushed its value to significant levels. The strategy appears to have initially paid off, as a whale transferred 4 million USDC from a major exchange to purchase a substantial amount of TRUMP tokens. However, declaring this a full bullish continuation might be premature.

The token unlock followed a rapid 28% rally over two days, breaking through key resistance levels and reclaiming higher price points. This rally flipped underwater holders into unrealized profit territory, as indicated by the Spent Output Profit Ratio (SOPR) spike. Historically, such spikes often signal a local top, followed by a sharp drop as holders cash out their profits.

While injecting liquidity into a bullish environment might seem like a tactical move, it is not without risks. The primary concern is the lack of solid bid-side support at key resistance levels. As the TRUMP team injects more coins into circulation, there is an expectation that Fear of Missing Out (FOMO) will drive traders to capitalize on the increased liquidity. However, address growth remains sluggish, with most buying activity shifting to the derivatives market. This indicates weak spot demand at the current price, leaving the door open for a potential sell-off unless whales intervene to support the price.

Consequently, a correction appears more likely, accompanied by intense liquidity squeezes. Unless there is a significant increase in structural demand, the recent unlock event could turn into a misstep for TRUMP. Reclaiming the $15 mark, which has been elusive, now seems like a challenging task. The outcome of this liquidity event will depend on the actions of whales and the overall market sentiment in the coming days.