Pepe coin (PEPE), a relatively new token on the block, is certainly making its mark on the crypto markets. The token has experienced astounding growth, appreciating by approximately 500% in the past two weeks according to CoinGecko. Yet, many continue to caution investors against its potential collapse, citing the seemingly excessive number of whales who have bought in since its mid-April launch.
These concerns have led to an increase in short interest among futures traders. Shorts, being bets against a token’s price, are in high demand as traders hope to capitalize on PEPE’s perceived overvaluation. Consequently, funding rates for futures tied to the token remain heavily negative, highlighting the dominance of these bearish positions.
However, that has not deterred the token from growing. In the last 24 hours alone, PEPE’s price surged by 80%, leaving many speculators with devastating losses. According to CoinGlass, short traders saw a combined loss of at least $11 million across various exchanges during that same period. Crypto exchange OKX experienced the brunt of the losses with traders taking a $5.5 million hit, followed by Huobi ($2.2 million), Bybit ($3.6 million), and BitMEX (a few hundred thousand dollars).
Though these trading platforms have only recently started offering PEPE futures trading, the losses seen by PEPE traders are already on par with those incurred in both bitcoin (BTC) and ether (ETH) futures liquidations.
Liquidations, wherein traders’ leveraged positions are forcibly closed due to insufficient margin, often have a serious impact on those involved. The rapid and significant losses that arise from large liquidations can be used as an indication of local tops or bottoms, enabling traders to reposition accordingly.
Given the fast-paced nature of the crypto market, participants should always bear in mind the potential risks associated with various tokens and investments. PEPE’s meteoric rise has undoubtedly captured the attention of investors and crypto enthusiasts alike. However, the skepticism surrounding its recent growth showcases an important aspect of the industry, reminding one that staying cautious and well-informed is paramount when navigating the constantly evolving, and often precarious, world of cryptocurrencies.
Source: Coindesk
