Pump.fun (PUMP) has lost 4% of its value on Tuesday as the broader cryptocurrency market has underperformed since the start of the week.
The launchpad token remains at risk of further downward movement as 10 billion PUMP will unlock on Tuesday.
Furthermore, retail interest has been declining, another factor that contributes to PUMP’s bearish trend.
Meanwhile, the technical outlook for PUMP indicates a bearish incline amid intense bearish momentum.
Low retail interest and monthly unlock could push PUMP lower
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PUMP has been underperforming since the start of the week, as traders are looking forward to Pump.fun’s monthly token release.
According to DeFiLlama, 10 billion PUMP tokens will be unlocked on Tuesday in early US trading hours and distributed to community and ecosystem reserves.
The 10 billion tokens would be worth roughly $20 billion, and the community balance could add further selling pressure on PUMP after coming under heavy pressure during last week’s bearish performance.
According to Coinglass, there has been a steady decline in PUMP futures Open Interest (OI), which fell to $157.26 million on Tuesday, indicating the reduced retail interest.
The trading volume has also dipped by 2% in the last 24 hours, suggesting that more traders are exiting their positions.
The Weighted funding rate remains below 1, indicating that the sellers are currently paying buyers.
With the momentum indicators and derivatives data all negative, PUMP could face further heavy selling pressure in the near term.
Will PUMP record further selloffs in the near term?
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The PUMP/USD 4-hour chart remains extremely bearish as Pump.fun has lost 20% of its value since last week.
At press time, PUMP is extending its dip for the fourth consecutive day from the February 6 high at $0.002201.
PUMP is currently trading at $0.001952 and could drop towards the $0.001886 support, aligning with a 4-hour candle low from February 5.
If the daily candle closes below this crucial support level, PUMP could extend the decline toward the December 29 low at $0.001775.
The momentum indicators have shifted bearish, indicating that the sellers are in control.
The Relative Strength Index (RSI) reads 36, heading towards the oversold region as sellers push for more control.
Furthermore, the Moving Average Convergence Divergence (MACD) indicator is converging with the signal line, risking a bearish crossover.
However, if the bulls regain control of the market and push PUMP’s price above the $0.002000 psychological level, it could aim for the 50-period Exponential Moving Average (EMA) at $0.002213.
An extended bullish run would see PUMP aim towards the February 3 wick of $0.002567 over the next few hours or days.
However, the broader market conditions are bearish, and PUMP could suffer further losses in the near term.
