3 reasons why Pump.fun could completely collapse in the near future

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Pump.fun (PUMP) is facing the risk of complete collapse as the on-chain metrics and current revenue are not very promising.

As indicated, the monthly revenue in July has decreased to $24.96 million. This figure is approximately 80% lower than the peak of $130 million, indicating that this launchpad platform is experiencing a severe revenue decline.

Simply put, there are fewer and fewer projects releasing new tokens, causing cash flow to dry up rapidly. As a result, the platform cannot sustain itself. However, PUMP is still trading at 4.7 times annual revenue - a rather high figure.

PUMPPUMP price chart | Source: TradingViewSo, where does that 4.7 times come from? Pump.fun recorded a revenue of $24.96 million in July, which would approximate to about $299.5 million if annualized. With 354 billion tokens in circulation and a market price of $0.0028, the market capitalization is around $1.02 billion.

This brings the revenue multiplier to about 4–5 times. Therefore, considering fundamentally relative to price, PUMP is priced quite high. In other words, the price of PUMP is higher than the revenue that can support it.

Pump.fun is running out

Thus, PUMP is in a difficult situation, but the high valuation does not help much. In the past month, the price has dropped by more than 33%. Combined with weak growth and revenue, this makes the token weak. Any decline in activity could trigger a rapid sell-off.

Worse, the concentration of supply from Pump.fun is still at a dangerous level. The top 10 wallets hold about 75% of the total tokens, making PUMP susceptible to a mass dump.

pumpSource: SolScanFrom all aspects, PUMP is facing a risky situation. Weak revenue, stagnant growth, and extremely high supply concentration make this token very vulnerable to any decline in activity.

With tokens being traded much higher than their intrinsic value, even a small slowdown can lead to a strong sell-off, putting pressure on the underlying fundamentals. Therefore, Pump.fun is definitely a project to keep an eye on.

Dinh Dinh

PUMP7.19%
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