In a major boost for tokens with protocol revenue and buybacks, SEC staff has now clarified when live tokens, buybacks, and staking receipts are not securities.
SEC securities clarification sparks market optimism
The SEC clarified that it uses the classic Howey test to determine when crypto assets and token sales constitute securities under federal law. The agency posited that the classification mostly focuses on economic reality, rather than terminology.
As such , digital assets fall under securities regulation if investors anticipate profits driven by managerial effort of founders.
At the same time, the SEC also noted that buybacks do not make a commodity into a security and same with liquid staking.
How did PUMP’s market react?
Thanks to the SEC’s clarification, PUMP recorded a major upswing. The altcoin rebounded from its $0.0038 slip, reclaimed and flipped $0.004, and rallied to daily high of $0.0046.
At the time of writing, PUMP was trading at around $0.0045, up 18% on the daily charts. The price hike was followed by a 57% surge in spot trading volume.
A look at capital flows
With investors incentivized by recent positive developments, PUMP’s network saw fresh capital flows.
According to DefiLlama, the protocol’s USD Inflows rose to $24 million. This marked a notable reversal after dropping for four consecutive days and hitting the negative zone just over 24 hours ago.
The hike in inflows hinted at more funds flowing into the network than outflows.
Elsewhere, the project has continued with its buybacks. After generating $3.2 million in revenue, PUMP spent $1.6 million in buying 398 million tokens according to Lbexplorer.
So far, the team has bought and burned $463.79 million worth of PUMP or 16.79% of supply removed from circulation.
Could profit taking derail the rally?
While buybacks continue to reduce available supply, sellers have continued to cash out even marginal gains.
On 26th September, for example, Spot sell volume rose to 2.68 billion while the buy volume fell to 2.54 billion. As a result, the buy sell delta dropped to -144.5 million — A clear sign of aggressive spot selling.
The same market behavior was observed on exchanges. The Spot Netflow has remained positive for three consecutive days, having jumped to $1.49 million after PUMP rebounded from its recent slip.
What next for PUMP?
At the time of writing, PUMP’s upside momentum seemed to be strong. The Trend Strength Index (TSI) formed a bullish crossover and rose to 6.8.
Likewise, the Aroon OSC has held at around 42 for two consecutive days, reflecting stabilizing upside momentum. Combined, these two indicators could allude to the likelihood of the trend’s continuation.
Therefore, if the favorable conditions hold, the altcoin is likely to reclaim $0.0048 and target a flip of $0.005. However, with profit takers actively engaged, the selling pressure could derail the uptrend and PUMP revisit $0.0038.
Final summary
- PUMP rebounded from its $0.0038 slip, surged by 18%, and flipped the $0.004-level.
- PUMP’s rally was driven by improving sentiment after the SEC’s latets clarification and buybacks.
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