Solana Sees 12% Price Drop Amid Significant Token Sales by Pump.fun

Cryptonews John Brightwater September 4, 2024

Solana Sees 12% Price Drop Amid Significant Token Sales by Pump.fun

The Solana cryptocurrency experienced a notable decline of 12% this past week, largely attributed to the ongoing liquidation of holdings by the memecoin launch platform Pump.fun. As referenced in a September 3 post on X by Lookonchain, the Pump.fun fee account recently divested approximately $1.38 million worth of SOL tokens, having sold another 10,300 SOL at a price of $134.46 just 40 minutes prior to the announcement. Cumulatively, Pump.fun has sold $41.64 million of SOL, with an average selling price of $157.50 per token.

The activities of large holders, often referred to as “whales,” have a pronounced influence on cryptocurrency markets, given their substantial financial stakes. Observers and traders frequently monitor the selling patterns of these entities to gauge potential short-term price movements of cryptocurrencies.

There appears to be a correlation between the recent frenzy surrounding memecoins on Solana and the depreciation of the SOL token’s price. According to well-known cryptocurrency trader and podcast host Luke Martin, Solana’s price rallied until it experienced a plateau following the mass launch of meme tokens via Pump.fun.

Furthermore, the price movements of Solana are increasingly intertwined with Bitcoin’s performance. Over the past quarter, Bitcoin values have diminished by nearly 18%, while Solana’s values dropped by approximately 22%, per data from Bitstamp.

Looking forward, there are discussions regarding the potential approval of a spot exchange-traded fund (ETF) for Solana in the United States, which could serve as a pivotal catalyst for price recovery. Recently, Brazil approved its first Solana ETF, which has set a promising precedent for similar initiatives in other regions. Alejo Pinto, a former IBM blockchain executive and founder of the Solana layer-2 network Lumio, indicated that the inherent uncertainty surrounding a U.S. Solana ETF could yield a favorable price impact should such approval occur, as it remains largely unpriced in the market.

Additionally, Manthan Dave, co-founder of Palisade, a digital asset custody platform backed by Ripple, speculates that a Solana ETF could potentially be approved before year-end 2024, particularly in light of the political climate leading up to the elections. It is well-documented that ETFs have significantly propelled the values of associated cryptocurrencies, as evidenced by Bitcoin, where such funds accounted for approximately 75% of new investments by early February as it reclaimed the $50,000 price level.

In summary, the combination of substantial sales by key entities like Pump.fun, alongside speculative developments regarding ETF approvals, constitutes a complex scenario for the Solana cryptocurrency, necessitating careful observation from investors and analysts alike.