- Pump.fun sells out, exposing Solana’s volatility
- The launch of Memecoin contributed to this trend.
- A broader market downturn further deepened the decline.
The cryptocurrency market, especially the altcoin sector, has always been volatile. Large price swings in a relatively short period of time are normal for most altcoins, including Solana. Events such as whale activity and other factors can have a significant impact on prices.
Recently, Pump.fun, a Solana-based DeFi protocol, revealed how big an impact it could have on SOL.
Solana Price Hit by Pumpfun and Mimecoin Craze
On Wednesday, September 4, Solana’s native token, SOL, saw a significant price drop, dropping by more than 12%. According to Lookonchain, this drop was related to a large sell-off by Pump.fun, a platform that launched Mimecoin on the Solana network.
In particular, the Pump.fun commission account sold $41.64 million worth of SOL, at an average price of $157.50 per token. The most recent sale took place late Tuesday, September 3rd, and sold $1.38 million worth of SOL, at an average price of $134.46 per coin.
Because liquidity in the altcoin market is relatively low, whale activity has a significant impact on the underlying price of the token. Large buying and selling activity can cause large price swings in either direction.
Bitcoin price impact on Solana
The recent Solana price drop following the Pump.fun sale has further deepened the token’s overall downtrend. Last week, Solana fell from $141 to $124, finally stabilizing at $134.
The move largely followed Bitcoin’s performance, which has been in a downtrend throughout the week. Starting at $58.7k, the token fell to $56k before recovering its losses on Wednesday’s bounce.
In this context, the recent sell-off at Pump.fun has worsened the underlying trend, causing some traders to panic sell. However, the recent rebound suggests that the market has assessed that SOL is oversold at its weekly lows. At least for now.
On the other side
- Pump.fun has brought significant activity to the Solana ecosystem, but its impact on the SOL price is less clear.
- Most altcoins are highly correlated with Bitcoin, except when certain events affect the rankings among other altcoins.
Why this matters
Solana’s recent price decline is a result of larger market forces, particularly bearish sentiment in cryptocurrencies, but it also shows how volatility due to whale activity can impact traders.
Learn more about Pump.fun’s criticisms:
Pump.fun Reaches $100 Million in Record Time Amid Growing Criticism
Learn more about FTX’s ongoing impact on cryptocurrencies.
FTX Collapse Continues to Hurdle Crypto Firms Like Galois Capital