- Pump.fun sellout revealed Solana’s volatility.
- Memecoin launches contributed to the trend.
- A broader market downturn compounded the decline.
The crypto market, especially in its altcoin segment, was always volatile. Large price swings in a relatively short time are normal for most altcoins, including Solana. Events such as whale activity and other factors significantly impact the price.
Recently, the fastest-growing DeFi protocol Pump.fun, native to Solana, revealed just how significantly they can affect SOL.
Solana’s Price Hit by Pump.fun and Memecoin Frenzy
On Wednesday, September 4, Solana’s native token, SOL, saw a significant price drop, falling over 12%. According to Lookonchain, this decline is linked to a major sell-off from Pump.fun, a platform dedicated to launching memecoins on the Solana network.
Notably, the Pump.fun fee account sold $41.64 million worth of SOL, averaging a price of $157.50 per token. The most recent sale was on late Tuesday, September 3, and amounted to $1.38 million worth of SOL at an average price of $134.46 per coin.
Thanks to relatively low liquidity in the altcoin markets, whale activity significantly impacts the underlying price of the token. Both large buying and selling activities can cause major price swings in either direction.
Bitcoin Price Impacts Solana
The recent Solana’s price decline, following Pump.fun sale compounded the broader downward for the token. In the last week, Solana went from $141 to a low of $124, finally stabilizing at $134.
This movement broadly followed Bitcoin’s performance, which was on a downward trend for most of the week. The token, which started at $58.7k, fell to a low of $56k, and only recovered its losses with a Wednesday rebound.
In this context, the recent Pump.fun’s sell-off just exacerbated the underlying trend, prompting some traders to panic sell. However, the recent rebound suggests that the market assessed that SOL was oversold at its weekly low, at least for now.
On the Flipside
- Pump.fun has brought significant activity to the Solana’s ecosystem. However, its effect on SOL’s price is less clear.
- Most altcoins are highly correlated with Bitcoin, except after specific events impact their ranking among other altcoins.
Why This Matters
Solana’s recent price drop is symptomatic of larger market forces at play, particularly the bearish sentiment in the crypto. However, it also highlights how volatility from whale activity can influence traders.
Read more about the criticism behind Pump.fun:
Pump.fun Hits $100M in Record Time Amid Mounting Criticism
Read more about FTX’s continued effect on crypto:
FTX Collapse Continues to Haunt Crypto Firms Like Galois Capital
