- JUP’s price rose to $0.59 as SOL climbed above $100.
- JUP’s volume on exchanges increased, suggesting rising interest in the token.
The price of Jupiter [JUP] climbed to $0.59 on the 7th of February, indicating a 13% hike. But later, the price pulled back and was trading at $0.53 at press time. That was the first time JUP hit $0.59 since the 3rd of February— three days after its official launch into the market.
However, there was a particular reason why Jupiter’s price surged, and Arkham Intelligence made this known in a post.
According to Arkham, the Jupiter exchange team had been pulling liquidity out of the initial JUP pool. At the time the post went out, the team had pulled 90 million JUP out of the pool.
The Jupiter team has begun to pull liquidity from the initial JUP pool.
So far, they’ve taken out 90M JUP ($52.2M) and $9.7M USDC.
This JUP represented overhanging sell pressure that has now been returned to Jupiter wallets. pic.twitter.com/x7x51CMsAp
— Arkham (@ArkhamIntel) February 7, 2024
For context, a liquidity pool is a collection of cryptocurrency locked in a smart contract. This helps to speed up orders and transactions on a Decentralized Exchange (DEX).
In terms of the price action, pulling liquidity out of the pool helps to minimize sell pressure on the cryptocurrency, and that was the case with JUP.
AMBCrypto also found that Solana [SOL] was another reason that influenced JUP’s jump. For a while, SOL has been changing hands below $100. But around the same time JUP’s price increased, SOL also rose to $102.
Source: CoinMarketCap
Previously, AMBCrypto had explained how Solana and Jupiter had some correlation since the latter was an exchange built on the blockchain. Recall that the exchange had airdropped millions of JUP tokens to its early users. Around that time, JUP’s price was $0.75.
The hype returns, then fizzles out
Since the eligible addresses claimed and sold the tokens, JUP’s price fell while SOL also decreased by 6%. Furthermore, the recent recovery showed market participants capitalized on the price action. This was because of the increase in trading volume on exchanges.
In the early hours of the 7th of February, the trading volume was around $ 265.95 million. But a few hours later, the volume jumped to $465.12 million, indicating that a lot of buying and selling was happening with JUP.
Source: Santiment
When it comes to the social volume, on-chain data showed that the metric increased during the price rise. From our observation, the social volume tremendously increased to 16.95 when JUP hit $0.59.
Social volume refers to the rate at which participants are searching for an asset. If the metric increases, it suggests that there are a lot of eyes tracking the token and discussing it. But when the social volume drops, it implies that the hype is going down.
Realistic or not, here’s JUP’s market cap in SOL terms
The chart above showed that the social volume had dropped after the initial jump. Therefore, market players seemed to have shifted their attention from JUP to other cryptocurrencies.
At the same time, this switch could offer a buying opportunity for participants in the long term.