The new meme-coin Pepe (PEPE) has experienced a sharp correction phase after an impressive surge of over 2,000% since its debut just a few weeks ago. On May 3, the PEPE price dropped to $0.00000089, down about 35% from its record high of $0.00000138, resulting in nearly an $80 million decline in market capitalization, pushing it out of the top-100 cryptocurrency index.
A combination of technical and fundamental indicators suggests that the PEPE price may face further downside risks. One factor contributing to this is the decline in retail interest for PEPE, with daily trading volumes decreasing across centralized and decentralized exchanges as prices fell. Google trends for the keyword “Pepe Coin” also indicate a drop in the retail hype over the past 48 hours.
Another concern about PEPE’s future is the token’s whale distribution. Data from CoinCarp.com shows that the top 100 richest PEPE addresses, also called “whales,” control 45% of the token’s circulating supply. With the possibility that one entity could control multiple addresses, a limited number of whales could have significant influence over PEPE’s future price trends, leading to the increased risk of price manipulation.
For example, Lookonchain revealed that five addresses allegedly linked to the Pepe team made a profit of $1.23 million in a thin liquid market, purchasing 8.87 trillion PEPE tokens at a low price and selling over 90% of their holdings at a higher price on Uniswap. While some top PEPE holders are centralized exchanges, data from analyst 008.eth shows that non-exchange PEPE whales have reduced positions recently. This hints at profit-taking, which coincides with the ongoing price correction.
Technical indicators back up the potential for a forthcoming 20% PEPE correction. The four-hour chart shows that PEPE/USDT has formed higher highs, but its relative strength index (RSI) has formed lower highs since April 30, creating a bearish divergence that suggests the upside momentum of PEPE’s price could weaken in the short term. Furthermore, PEPE is currently on track to reach its 50-4H exponential moving average near $0.0000047410, down 20% from current price levels.
However, it is essential to keep in mind that the PEPE token is new, and therefore lacks sufficient price history to predict its future price movements accurately. Moreover, meme-coins are notorious for their sharp volatility and considerable price moves. Case in point, Dogecoin rallied 7,000% since 2020, largely due to vocal support from billionaire investor Elon Musk.
While this article doesn’t provide investment advice or recommendations, every investment and trading move involves risk. Therefore, readers should exercise caution and conduct their research when making any decisions.
Source: Cointelegraph
