Recently, the $MEME token on SOL has experienced a pullback, and many people are asking why this is happening. In fact, you need to understand that no cryptocurrency will keep rising indefinitely; a pullback is just a matter of time and phase. Some tokens might directly surge to a market cap of 50 million or 100 million without experiencing a pullback, but ultimately, a pullback is unavoidable.
Reason Analysis:
1) From the perspective of individual tokens:
a. Market makers need capital to drive the price up. Where does this capital come from? Firstly, it comes from the market makers' own funds, and secondly, from the funds made by shorting the price after the first wave of price increase. Any operation needs to consider the rate of return, and market makers typically hope to maximize the market with minimal investment.
b. Unreliable market makers. Some unreliable market makers may only make one price increase and then withdraw; in this case, the pullback is not considered a "normal" pullback. How to avoid these "bad market makers"? The answer lies in the "meme self-eight questions," which means assessing the sustainability of a token through comprehensive analysis from various aspects, including narrative, market makers, mechanisms, etc.
2) From the market perspective:
a. Liquidity issues. When a liquidity black swan event occurs in the market, the pullback of mainstream tokens like Bitcoin and Solana will directly impact the $MEME token.
b. On-chain black swan events. Major issues or vulnerabilities on-chain can also negatively affect market sentiment, thereby influencing the price trend of $MEME.
In summary, pullbacks are a part of the market, and understanding these factors can help you make more rational judgments and decisions.
