After the launch of the PUMP token on Pump.fun, its price has dropped nearly 48%. This article will examine the reasons for this market behavior and its impact on the platform.
PUMP Token Drops in Value Post Launch
The PUMP token has seen a price decrease of nearly 48% since its launch on July 12, 2023. This decline occurred even as the Pump.fun platform generated $10.2 million in revenue from July 14 to July 20. The revenue was derived from both the memecoin launchpad and a newly introduced decentralized exchange (DEX).
Token Supply Reduction Mechanism
A portion of the DEX fees, around 25%, is allocated toward burning PUMP tokens, which is intended to reduce the overall supply. However, despite increased activity and fee income, the token price has decreased faster than the pace of supply reduction.
Large Holder Selling Pressures the Market
Large holders, often referred to as whales, controlled a majority of the tradable tokens from day one. Reports indicate that two early private investors sold a combined 25.5 billion tokens, collecting approximately $39.6 million in returns. This significant early profit-taking has introduced heavy selling pressure, flooding the market with supply and outweighing buying interest.
Despite the drop in the PUMP token price, the Pump.fun platform continues to attract users and generate transaction volumes. However, the lack of restrictions on early token holders has negatively affected investor sentiment and continues to impact price stability.
