Meme Coin Market Struggles as Pump.fun Graduation Rate Drops to 1%

The meme coin market on Pump.fun is experiencing significant challenges, with the platform’s “graduation rate” falling below 1% for the fourth consecutive week. This metric, which measures the percentage of tokens that successfully transition from the incubation phase to full tradability on a Solana decentralized exchange (DEX), has reached a record low. Historically, Pump.fun’s graduation rate was notably higher, with the best-performing week in November 2024 seeing 1.67% of launched tokens move to the open market. During that week, approximately 323,000 tokens were launched, resulting in around 5,400 tokens successfully graduating into Solana’s DeFi ecosystem. However, the current decline in token creation on both Pump.fun and Solana has led to an average weekly graduation rate of around 1,500 tokens over the past month.

The persistent struggles of meme coins indicate waning investor enthusiasm, as these assets have become increasingly associated with speculative gambling or quick-profit schemes. Despite broader market improvements and a weaker US dollar, which historically improves liquidity conditions for risk assets, meme coins continue to underperform. The US Dollar Index (DXY) peaked at 107.61 on Feb. 28 before declining to 103.95 on March 14, signaling potential improvements in liquidity. However, these shifts have not led to a recovery in the meme coin sector, with no signs of a meaningful resurgence.

Even high-profile entries into the meme coin space have failed to reverse the trend. For instance, the token associated with US President Donald Trump plummeted from its all-time high set on Jan. 19. This decline suggests a major shift in investor sentiment, as meme coins were once a dominant narrative in the bull market. Despite improved liquidity conditions and marginal progress in inflation data, the meme coin sector remains in a prolonged slump.

Despite the challenges faced by meme coins, Robinhood has expanded its crypto offerings by listing three new meme coins—Pengu (PENGU), Pnut (PNUT), and Popcat (POPCAT). These listings are part of Robinhood’s strategy to compete with major exchanges and capitalize on strong customer demand for additional meme coin trading options. The company already supports Dogecoin (DOGE), the largest meme coin by market capitalization, and launched crypto futures trading in January. Johann Kerbrat, vice president and general manager of Robinhood Crypto, emphasized the company’s commitment to providing customers with what they want, as long as it can be done safely.

Regulatory shifts have also played a crucial role in Robinhood’s crypto expansion. The current administration has pledged to transform the United States into the “world’s crypto capital” and has appointed industry-friendly leaders to key regulatory positions. In February, the US Securities and Exchange Commission (SEC) announced that most meme coins do not qualify as securities and therefore do not fall under its jurisdiction. This policy reversal from the previous administration has created a more favorable regulatory environment for meme coins.

Industry experts are raising concerns about politically endorsed cryptocurrencies, highlighting the need for stronger investor protections and liquidity safeguards to prevent market collapses. These warnings come after the Libra (LIBRA) token, endorsed by Argentine President Javier Milei, suffered a catastrophic $4 billion market cap wipeout due to insider cash-outs. Blockchain analytics firm DWF Labs reported that at least eight insider wallets withdrew $107 million in liquidity, triggering the collapse and shaking investor confidence. To avoid similar failures, tokens backed by high-profile political figures will need more robust safety measures, such as liquidity locking or making tokens in liquidity pools non-sellable for a predetermined period. These mechanisms could help prevent mass sell-offs and sudden liquidity drains.

The Libra debacle left 74,698 traders with a cumulative loss of $286 million, underscoring the need for liquidity locking, especially during the launch phase of a token when volatility is at its highest. This safeguard is crucial for maintaining a stable trading environment and reducing the risk of quick market crashes. The fallout from the Libra scandal has attracted increased scrutiny from regulators, with lawmakers introducing new legislation aimed at protecting crypto investors from rug pulls and insider fraud. The incident has also reignited discussions about the need for more transparent token launches. Pre-launch wallet transparency and rigorous due diligence from launchpads could help mitigate risks for investors, allowing them to make more informed decisions.