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Token Unlocking and Its Impact on PUMP Token
Today we are going to talk about one of the events that all cryptocurrencies go through in some way or the other, and that is the token unlocking. In the next 4 days, one of the recently launched tokens that actually took the hype of the market, PUMP token, is going to see its unlocking event on 10th of August. So we still have 4 days to act upon this and make sure that we do not get ourselves in losses during this unlocking. Let us look at the chart and understand what the upcoming unlocking event can do to this token.
Analyzing the Chart
We are going to look at the charts and discuss what can happen in the coming days, and side by side, we are also going to discuss the effect that the unlocking of a token has on the cryptocurrency.
In the screenshot above, you can see I have created three levels that are marked by three different colors: the red line, the white line, and the pink line. The red line, as you can see, I have also mentioned there, is the bearish area. While PUMP token was below that red line, it was in the bearish area, but we are already above it. We have broken that resistance already, and now we are aiming for the white line, which is the next resistance for the PUMP token.
The Importance of the White Resistance
This is an important resistance because a few days back, we lost support on this line as you can see in the screenshot above. So breaking it will be the prime move for the token before we can actually go further and see a massive pump in this token.
Token Unlocking vs Market Reaction
In the next few days, the PUMP token will see its unlocking event. Still, if you look at the chart below, you will see that it is going up. While the circulation is about to increase, the market is responding in the opposite way and pumping.
This is because in most cases, when token unlocking takes place, whales and market makers try to manipulate the market of that particular token. They pump it to a higher level so that they can dump it before the token unlocking takes place. We saw the same thing happen in Arbitrum last year when it crossed $2 before the token unlocking took place, and today you can see it trading below $0.50, which is actually 75% less value than the token had before the unlocking.
Possible Fake Pump Before Unlocking
That is why I have marked that area as the possible fake pump before unlocking. I think we might capture that area for a short duration of time. If you are holding PUMP token, I would suggest you take exit from the token before 10th of August because after unlocking, the most expected scenario is that the PUMP token will crash and it may come down to test the red line once again or maybe even go below it.
My Personal Plan
I am myself holding some tokens and I plan to exit the market in the next two days. I am going to monitor it a little more as I think that the white resistance, which is the important resistance for PUMP token, will be broken. We might even see a massive pump that will be a fake pump and where the token price can cross the pink line as well, but that is not a guarantee. To be on the safer side, I am just waiting for the white resistance line to get broken so that I can start selling my tokens. Even if that line is not broken, I have plans to exit from the market so that I will not be in loss when the token unlocking event takes place.
What are you going to do?
So we have the bearish area, we have the important resistance area below which we are trading right now, and we have also seen the possible fake pump area before token unlocking that can be captured by the token. Let us see what will happen in the next few days. I expect a dump for sure because that is what we usually see in most cases. If you are someone who is holding PUMP token, make sure to exit the market on time and invest it somewhere else. Rest, the decision is yours because the money is yours, and I am just here giving you suggestions based on what I have learned in the last few years of being a crypto trader. So you are always welcome to do your own research, in fact I will motivate you to do that as it will help you learn on how you really take your own decisions. Do not forget that I am just a normal analyst sharing the market structure here and I am not your financial advisor.
Thank You and Happy trading everyone
