The price of Pump.fun (PUMP) could break out thanks to the wave of returning users

Pump.fun (PUMP) surged nearly 10% at the time of writing on Tuesday, following a 10% increase recorded the previous day. This recovery trend is accompanied by a surge in network activity, from user numbers to trading volume, after the platform announced a $3 million Pump Fund. In the derivatives market, investor risk sentiment for PUMP has returned, evidenced by rising open interest and the funding rate remaining positive.

Technically, the PUMP price has broken above the 100-day exponential moving average (EMA), while the MACD indicator has just issued a buy signal, opening up positive short-term growth prospects.

Pump Fund boosts network activity and interest from retail investors

Data from the Dune dashboard of “adam_tehc,” aggregating over 1,500 queries and 44 dashboards, shows Pump.fun exploded in January. User activity peaked at 280,121 on Saturday, including 156,166 new users, before slightly decreasing to 122,628 on Monday, with 30,630 new users.

Source: Dune This strong growth was accompanied by a trading volume on the platform reaching $1.145 billion on 01/20, coinciding with the announcement of the $3 million Pump Fund. This fund will support 12 projects in the Build in Public Hackathon, with each project receiving $250,000 at a valuation of $10 million.

Source: DeFiLlama At the same time, demand from retail investors remains steady, reflected in a 33% increase in open interest (OI) for PUMP futures contracts, reaching $235.72 million within 24 hours. Risk-on sentiment is reinforced by a positive funding rate of 0.0039%, indicating investors prefer to hold long positions. Meanwhile, short liquidations within 24 hours totaled $939,200, far exceeding long liquidations of $108,770, signaling a strong wipeout of bearish positions.

Source: CoinGlass The network activity combined with optimistic sentiment from retail investors suggests a strong growth outlook for Pump.fun in the near future.

Technical outlook: Will PUMP continue to rise?

PUMP is trading around the 100-day EMA at $0.002930 at the time of writing on Tuesday, a level that previously limited upward momentum in mid-January, forming a critical decision zone. The recovery of this meme coin is expanding its breakout trend, promising short-term upward momentum.

A daily close above $0.002930 could push PUMP toward the next resistance at $0.003399, the November 20 high, before targeting higher levels at $0.004842 – a level tested on 11/11.

Daily PUMP/USDT chart | Source: TradingView Daily momentum indicators show the bulls regaining control. The MACD lines are trending upward and the histogram has turned positive, indicating renewed bullish momentum. The RSI is currently at 59, bouncing from the midline, with room to grow before reaching overbought territory.

Conversely, if PUMP fails to close above $0.002930, the price could retrace to the first support at the 50-day EMA, around $0.002597.