Breaking down how PUMP surged 11% despite 744M token sell-off

Key Takeaways

Pump.fun surged 11% after defending $0.0026, reclaiming $1 billion market cap. Futures demand drove gains, but sellers dumped 745 million tokens. 

Pump.fun [PUMP] successfully defended $0.0026 support, surging 11.3% to reach a local high of $0.00306. At the time of writing, PUMP traded at $0.0029, up 8.3% on the day.

Over the same period, the altcoin’s market cap climbed back above $1 billion after briefly dropping to $975 million, signaling steady capital inflow. 

So, is this the start of something bigger or a mere technical bounce?

Demand for Futures skyrocketed

Interestingly, as PUMP declined for two straight days, investors rushed into derivatives to take positions.

According to Coinalyze, the memecoin’s Funding Rates surged, reaching levels of 0.021, which are usually considered elevated.

Also, Predicted Funding Rates across exchanges averaged near +0.01%.

Source: Coinalyze

Typically, when the Funding Rate spikes, it signals demand for long positions.

Meanwhile, PUMP’s Long/Short Ratio sat at 2.48, at press time, where long positions accounted for 71% of the total Futures contracts. Naturally, this dominance implied that traders were betting on higher prices.

Source: Coinalyze

Thus, investors bought the dip through Futures, boosting PUMP’s short-term recovery.

Profit taking hits elevated levels

As expected, once PUMP slightly recovered from the recent dip, sellers saw the opportunity to cash out and realize profit. 

Source: Coinalyze

According to Coinalyze, sellers dumped 744.9 million tokens by press time, while buyers took 533 million. This left a negative Buy/Sell Delta of -211 million tokens, marking four straight days in red.

Exchange activity echoed the shift. According to CoinGlass, PUMP Spot Netflow turned positive for the first time in five days.

Source: CoinGlass

On the 27th of August, Netflow surged to $165.9k, reflecting a higher inflow compared to outflow. Often, when sellers dominate exchanges, it causes significant downward pressure on an asset, resulting in lower prices. 

Can PUMP hold?

According to AMBCrypto’s analysis, PUMP bounced off its low as traders piled into futures.

As a result, the memecoin flipped the short-term Moving Average (9DMA) at $0.0029, signaling strong upward momentum. At the same time, Stochastic RSI made a bullish crossover, further reinforcing the upward trend. 

Source: TradingView

At press time, TradingView showed PUMP testing its 21-day Moving Average near $0.0032.

To sustain the bullish case, bulls must hold $0.003 and flip the 21DMA. Doing so could open room to $0.0038.

Having said that, if momentum fades, PUMP risks another retest of $0.0026.