Solana Price Forecast: Key Support Under Fire as Pump.Fun Keeps Dumping SOL

Solana (SOL) has been retreating in the past few days after rallying past a key resistance, as one of its top protocols continues to dump the token to cash out on its fees.

SOL has dropped by 5% in the past 7 days, even though it has still booked a 17% gain in the past month, which makes it the top-performing token in the top 5 during that period.

The selling pressure seems to have increased as Pump.fun, the popular Solana-based memecoin launchpad, has been dumping SOL during the rally.

The crypto analyst Ted Pillows warned about this ongoing sell-off on his widely followed X account. Yesterday, the protocol sold $10 million worth of the token, while, to date, it has offloaded a mind-blowing total of $794 million worth of the altcoin in total.

Community members are disgusted by this behavior and have accused Pump.fun of extracting money from unwary traders to fill their pockets rather than contributing to Solana’s ecosystem growth.

Pump.fun Sales Could Cap SOL’s Upside Potential in the Near Term

On-chain data from Token Terminal indicates that Pump.fun pulled in nearly $20 million in fees last month. On average, the protocol extracts around $25 million from users who turn to its platform to launch new memecoins or trade them.

Since its launch, Pump.fun has generated $1.1 billion in fees, according to this website. Even though the protocol has launched a token burn program that supposedly uses a big portion of its fees to reduce the circulating market cap of PUMP, it appears that they also liquidate a big portion of those proceeds via withdrawals to exchanges.

The math adds up, as the protocol’s website shows that $406 million worth of PUMP has been burned since the program was launched. If we add up the $794 million extracted and sent to exchanges, that gives us $1.2 billion — a figure that is quite near the total in fees that the protocol has reportedly produced.

What this implies for the future of SOL is that its price action could be negatively impacted by sustained selling from one of its most important applications.

It also explains why the token may have failed to move to higher levels during the latest bullish phase.

SOL Retests Key Support and Could Drop to $65 If This Area Falters

Looking at the daily chart, Solana is back at the $78 support, which has been our key level to watch since this relief rally started.

We saw a break above this mark as an encouraging sign that the token could be getting ready for a sustained uptrend to the $90 level. However, Pump.fun’s sales may have contributed to pushing SOL back to this demand zone.

If the price bounces off this mark, then we might get a second chance to see SOL rally to that target. However, if we break below this support area, the odds favor a retest of the $70 – $65 level in the near term.

Bullish momentum persists for now, at least as the daily Relative Strength Index (RSI) still sits above 50. However, if the oscillator breaks below the signal line, that could be considered an early signal of a shift in the price trend.