PUMP Drops 12% While Solana Nears $200 – Buy the Dip or Wait?

Solana (SOL) has shed 18% of its value in the past 7 days as the market has taken a breather following the Federal Reserve’s decision to lower interest rates for the first time this year.

This could be interpreted as a ‘sell the news’ moment. This phenomenon occurs when investors have already priced in a widely expected event (e.g., a rate cut) and liquidate their positions to take some profits off the table once it happens.

Along with SOL, Pump.fun (PUMP) has booked a strong 12% loss in the past 24 hours along and it is now down 32% in the past 7 days, as meme coins as a whole were heavily battered by this recent wave of selling.

PUMP’s decline has outpaced that of top meme coins in the Solana ecosystem during this same period, possibly as its rally was a bit overextended.

The token had been riding a strong wave of positive momentum in the past month or so after the launch of Livestreams and the ongoing burn of PUMP by using the protocol’s transaction fees.

Let’s have a look at the latest price action for PUMP and SOL to see if this latest correction is creating an opportunity for late buyers to enter this bull market at much more decent price levels.

SOL Hits Key Support Line – Big Bounce to $300 Coming?

Solana (SOL) has dropped for 5 consecutive days after it experienced some strong selling pressure at $250.

SOL/USD Daily Chart (Coinbase) – Source: TradingView

As a result of this downturn, the token has hit a key trend line support that has acted as a cushion for previous pullbacks twice.

If SOL bounces off this level and the move is accompanied by above-average volumes, the odds of a retest of that $250 ceiling will be quite high.

We are still in a bull market despite the latest decline, as the macroeconomic environment still favors a positive outlook for cryptos.

The Federal Reserve is expected to make a second rate cut during its October FOMC meeting, while institutional interest and adoption of cryptos are accelerating.

Multiple altcoin-linked exchange-traded funds (ETFs) have been launched in the past two months, including the first for SOL – the REX-Osprey Solana + Staking ETF (SSK). This fund has attracted over $300 million in assets already, just three months after it hit the trading floor.

SOL Could Rally to $300 first if this trend line support holds, and the rally could accelerate much further if institutional adoption continues to grow.

Momentum Readings Hint at Local Bottom for PUMP

PUMP has now hit a key support at $0.0050 from which it could bounce strongly as well.

PUMP/USD 4-Hour Chart (Coinbase) – Source: TradingView

The token has experienced a strong correction after it reached the $0.0085 area. However, the Relative Strength Index (RSI) is sending some early signals that the decline has gone too far.

This momentum indicator has hovered near oversold levels already in the 4-hour chart. Paired with a move to a key support, this increases the odds of a strong bounce.

If that happens, a first target for PUMP could be set at $0,00700. This means a 40% upside potential for the token in the near term. A strong uptick off this level, accompanied by above-average volumes, would confirm that the token could be ready for its next leg up.