Pump.fun's Memecoin Graduation Rate Hits Historic Low at 1%

Pump.fun, a platform known for launching memecoins, has seen a significant decline in the success rate of its tokens. For the past four weeks, the graduation rate, which refers to the percentage of tokens that become fully tradable on a Solana decentralized exchange, has remained below 1%. This marks a historic low for the platform, indicating a waning interest in memecoins among investors.

Historically, Pump.fun's graduation rate has never been exceptionally high. The platform's best week was in November, when 1.67% of memecoins successfully transitioned to the open market. However, the sheer volume of tokens launched during that period made this percentage more impactful. During the week starting November 11, 323,000 tokens were created on Pump.fun, resulting in approximately 5,400 tokens entering Solana’s decentralized finance (DeFi) economy in a single week.

With the decline in token creation volume on both Pump.fun and Solana, the number of weekly token graduations has plummeted to a four-week average of around 1,500 tokens. This drop reflects a broader trend of diminishing investor appetite for memecoins, which have often been criticized as speculative investments or quick cash grabs for their creators.

Several political figures, including former US President Donald Trump, have launched their own memecoins. However, these tokens have also faced significant declines. Trump's token, for instance, is down 84% from its all-time high set on January 19. This further underscores the challenges faced by memecoins in the current market environment.

Despite improving liquidity conditions, memecoins continue to struggle. In February, analysts noted that a strengthening US dollar had pressured Bitcoin prices by tightening dollar-denominated liquidity. However, the US dollar has since weakened, with the US Dollar Index (DXY) dropping from a peak of 107.61 on February 28 to 103.95 on March 14. This weakening has led to a rebound in liquidity indicators and some marginal improvements in inflation data. Nevertheless, memecoins have not shown signs of recovery, indicating deeper underlying issues.

The struggling memecoin market has contributed to a significant wipeout in crypto market capitalization, with a loss of $1 trillion. This redistribution of wealth may lead investors to remain cautious about deploying further capital, causing rebounds, even those triggered by better-than-expected inflation data, to be limited. Analysts warn that this could lead to further declines in Bitcoin, with a potential retracement to as low as $73,000, a level they believe will provide strong support.