Memecoin launchpad Pump.fun started buying back its PUMP tokens as it is undervalued. With the massive buyback, the price of the token has taken off from the 4-month support level it was resting on.
Pump.fun, the memecoin launch pad on the Solana ecosystem, started to buy back its PUMP tokens that were circulating in the open market since July. The launch pad began this massive buyback of $205 million, which is about 13% of the total supply, after realizing the token was undervalued with an excess of supply freely available in the market.
According to sources, this buyback is not ordinary. In fact, it represents the largest cumulative token buyback ever recorded within the entire Solana blockchain, surpassing the previous record held by the Raydium (RAY) decentralized exchange.
How does buying back their own tokens help?
First and foremost, reclaiming 13% of the supply, spending millions, shows the confidence that the project has in its token. They see that the project has potential and hence, they invested the money they have in the project. This buyback could boost investor confidence and improve the sentiment.
On the technical front, buying back absorbs the selling pressure and creates a floor price. This eventually prevents the price from further dips and stabilizes the market.
From a token holder’s perspective, it adds value to their portfolio as the price of the token appreciates. An improved per‑token value helps reduce inflationary pressure.
From Pump.fun’s perspective, the project is well-funded and has a strong treasury along with an active team supporting the ecosystem all the way.
What is happening with the price?
With all these efforts, PUMP has successfully found its floor price as it is consolidating. Since PUMP is currently fluctuating inside a falling wedge, it will eventually break out to the upside.
However, the falling wedge pattern is not fully formed, as such, PUMP will rebound inside the wedge for sometime before breaking out. Once the token breaks out, the first resistance it will find is at $0.0036.
