Memecoins Struggle on Pump.fun, Dragging Bitcoin Down

The once-booming memecoin craze on Pump.fun is now showing signs of exhaustion, with its so-called “graduation rate” plummeting to historical lows. For four consecutive weeks, beginning on February 17, the percentage of tokens successfully navigating their way out of the incubation phase has remained below 1%—an unprecedented streak, according to Dune Analytics.

Pump.fun defines “graduation” as the process by which tokens transition from their initial launch phase into fully tradable assets on a Solana-based decentralized exchange (DEX). To meet this threshold, a token must fulfill specific liquidity and trading prerequisites. Despite the platform never boasting particularly high success rates, its best-performing week dates back to November 2024, when 1.67% of launched tokens managed to reach the open market.

Yet, the significance of that number was amplified by sheer volume. In the week starting November 11, approximately 323,000 tokens debuted on Pump.fun, meaning that even a 1.67% graduation rate translated into an impressive 5,400 tokens becoming part of Solana’s decentralized finance (DeFi) ecosystem in just seven days.

Fast forward to today, and both Pump.fun and Solana have seen a measurable decline in token creation activity. The result? Graduations have dwindled, averaging just 1,500 tokens per week over the past month. The downturn raises concerns about sustainability and the dwindling enthusiasm for memecoins, which have increasingly become associated with speculative gambles rather than viable digital assets.

Memecoins Face a Harrowing Decline

The diminishing graduation rate signals a growing disinterest in memecoins, often regarded as little more than high-risk lottery tickets or lucrative pump-and-dump schemes for their creators. Even high-profile figures have jumped on the bandwagon, including U.S. President Donald Trump, who launched his own memecoin—only for it to nosedive by 84% from its all-time high on January 19, based on data from CoinGecko.

Adding to memecoins’ woes is their surprising inability to capitalize on broader financial improvements. Analysts at Matrixport had previously identified a strengthening U.S. dollar as a key pressure point for Bitcoin, with rising dollar-denominated liquidity tightening financial conditions and weighing on crypto prices. However, the landscape has since shifted.

Over the past month, the U.S. Dollar Index (DXY)—which measures the dollar’s strength against a basket of major currencies—reached a peak of 107.61 on February 28 before declining to 103.95 by March 14. By conventional logic, this weakening of the dollar should have spurred renewed liquidity in the crypto markets. And indeed, broader indicators suggest some degree of relief, particularly with slight improvements in inflation metrics.

Yet, despite these seemingly favorable conditions, memecoins remain in a slump, with virtually no signs of recovery. In their report, Matrixport analysts underscored this anomaly, stating, “The U.S. dollar has recently weakened, leading to a rebound in liquidity indicators and some marginal improvements in inflation data. Despite these positive shifts, memecoins—previously one of the strongest narratives during this bull market—continue to struggle significantly, with no apparent recovery.”

Bitcoin Struggles Amid Memecoin Fallout

The broader cryptocurrency market has not been immune to the fallout from memecoins’ struggles. According to Matrixport, the ongoing turbulence in this speculative sector has contributed to a staggering $1 trillion wipeout from the overall market capitalization of digital assets.

The implications of this downturn extend beyond just memecoins. The precarious situation has left many investors hesitant to inject additional capital, limiting rebounds—even those bolstered by unexpectedly favorable inflation data. A more cautious investment climate often translates to suppressed market enthusiasm, with crypto participants remaining wary of further downturns.

Bitcoin itself could be headed for even more turbulence as a result. Matrixport analysts warn that the persistent unease may push the leading cryptocurrency downward, potentially testing the $73,000 level—a point they believe represents strong support. If Bitcoin were to approach this threshold, it could serve as a critical juncture for determining whether a rebound is on the horizon or if further declines are imminent.

In essence, the unraveling of Pump.fun’s memecoin mania has repercussions far beyond its own ecosystem. What was once a thriving sector of speculative trading is now teetering on the edge of irrelevance, taking retail hype and, to some extent, Bitcoin’s momentum with it. Whether this is merely a temporary correction or a lasting decline remains to be seen, but for now, the era of effortlessly minted, high-flying memecoins appears to be fading into crypto history.