The new meme-coin Pepe (PEPE) has entered a strong correction phase after rising more than 2,000% since its debut a few weeks ago.
On May 3, the PEPE price fell to $0.00000089, down 35% from the all-time high of $0.00000138 reached two days ago. As a result of the correction, its market capitalization dropped by nearly $80 million, dropping it from the top 100 cryptocurrency index.
A combination of technical and fundamental indicators point to further declines in the PEPE price.
Retail interest falls
PEPE’s daily trading volumes decreased on centralized (CEX) and decentralized (DEX) exchanges as prices fell. The same was true for Google trends for the keyword “Pepe Coin”, whose score dropped from 100 to 7 in one day, suggesting that the retail hype has subsided in the last 48 hours.
The distribution of PEPE whales is worrisome
The 100 richest PEPE addresses, also known as “whales”, control 45% of the circulating supply of the token, according to data tracked by CoinCarp.com.
These 100 addresses can belong to 100 different individuals. But one entity can control more than one direction, which gives a limited number of whales more say over the direction of future PEPE price trends, increasing the risk of price manipulation.
For example, Lookonchain revealed that five addresses allegedly linked to Pepe’s team made a profit of USD 1.23 million in an illiquid market. They bought 8.87 billion PEPE tokens at a low price and sold more than 90% of their holdings at a higher price on Uniswap.
Some of the main PEPE holders are centralized exchanges. But according to data tracked by analyst 008.eth, non-exchange PEPE whales have recently reduced positions, pointing to profit-taking that coincided with the current price correction.
Is a PEPE 20% correction looming?
PEPE has rallied without any concrete rationale to back it up, and the evidence that fewer whales are controlling the uptrend could nullify short-term gains. The technical data matches.
For example, the four hour chart shows that the PEPE/USDT pair has made higher highs, but its Relative Strength Index (RSI) has made lower highs since April 30. In other words, a bearish divergence which suggests that PEPE’s bullish momentum is likely to weaken in the near term.
Furthermore, PEPE looks on track towards its 50-4H exponential moving average (50-4H EMA; the red wave) near $0.0000047410, 20% below current price levels.
A further break below the red wave could see the token test the $0.00000020-0.00000017 range as the next bearish target.
Of course, the PEPE token is new and therefore lacks adequate price history to anticipate its future price movements. Furthermore, meme-coins are known for their strong volatility and large price movements.
Dogecoin, for example, has appreciated 7,000% since 2020 thanks to the express support of billionaire investor Elon Musk.
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