Assessing PUMP’s downtrend as Pump.fun lawsuit intensifies

The memecoin launch platform, Pump.fun [PUMP] was in a heap of legal trouble. A federal court approved an expanded class-action lawsuit against the Solana Foundation, Jito Labs, Pump.fun, and related executives.This happened after a whistleblower revealed 5,000 internal chat messages that illuminated the accusations of insider trading and market manipulation.The team is accused of creating a platform that allowed 98.6% of the 14 million memes launched on it to collapse to zero. It is estimated to have caused between $4 billion and $5.5 billion in retail investor losses.Investigating the most recent PUMP price movesSource: PUMP/USDT on TradingViewSince the 9th of December, the PUMP token has shed 39.3%, from $0.0032 to $0.00196. Its latest bout of losses led to the loss of the long-time support level at $0.0025.This demand zone had been tested thrice since July and defended each time. The strength of the past two months’ downtrend finally prevailed.The CMF on the daily chart has been below -0.05 for the better part of the past six weeks, showing seller dominance. The MFI’s reading of 40 also signaled selling pressure and bearish momentum.Source: PUMP/USDT on TradingViewThe most recent swing move downward was used to plot a set of Fibonacci retracement levels. It showed that a bounce to $0.0025 and $0.0026 was possible, as they were the 61.8% and 78.6% retracement levels.What is PUMP likely to do next?The current 1-day and 1-hour timeframe price structures were bearish. The Coinalyze data showed a 4% increase in Open Interest in 24 hours, even though PUMP prices were down 1.57% in 24 hours.Source: CoinGlassThe Liquidation Map highlighted $0.00193 and $0.00207 as key short-term levels with concentrated leverage. That leverage buildup could pull PUMP’s price toward either level before a potential reversal.Traders’ call to action- Maintain bearish bias but…A push toward $0.00207–$0.0021 would likely trigger bearish continuation.As the Fibonacci levels revealed, traders should also be wary of a bounce all the way back to $0.0026. The $0.0023-$0.0025 was also a candidate with a strong likelihood of reversing any PUMP price bounce.Traders can look to go short upon a retest of the resistance levels mentioned, with tight stop-losses.For example, a short entry at $0.00207 will be invalidated by a move past $0.0021, as it is a local swing high on the hourly chart.Final ThoughtsThe Pump.fun platform’s legal woes have strengthened the bearish sentiment around its native token.The $0.00207 and $0.0023 supply zones are short-term resistances that could initiate the next bearish price move.Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion