The incredible price rally of the meme coin PEPE continues. According to Coingecko data, the frog token has risen to become the third most popular meme coin, behind Dogecoin (DOGE) and Shiba Inu (SHIB), with a market cap now at $688.5 million, leaving FLOKI behind. In the ranking of all cryptocurrencies, PEPE is now ranked #73, while FLOKI is ranked #123 ($332.5 million market cap).
Remarkably, PEPE initially retreated to $0.0000008383 yesterday, but since then the price has skyrocketed more than 112% at times, hitting a new all-time high at $0.000001794. The brutal price move is likely due to a short squeeze, as tweeted by the data tracking platform Laevitas.
Pepe shorts adding more fuel to the fire. pic.twitter.com/mdcS1n60iQ
— Laevitas (@laevitas1) May 4, 2023
Funding rates are a measure of the payments that futures traders have to make to keep their positions open. If the funding rate is negative, it means that traders with short positions are required to pay the funding rate to traders with long positions. The opposite is true for positive funding rates.
PEPE’s funding rates were extremely negative before the short squeeze. This means that short positions were dominant, which showed the dominance of bearish positions in the derivatives market. Meanwhile, the spot market was strong.
Often, however, the market tends to do the unexpected. When the overwhelming majority is bearish, it is easy to wipe out liquidity, especially for larger players or market makers. This is especially valid for smaller coins with low liquidity and a comparably small user base. PEPE still only has 80,000 total addresses.
Trader @htltimor added that some shorts are being chased like there’s no tomorrow. “It’s fun (and was extremely predictable),” says the trader, who shared the chart below and shared another piece of advice:
You can *sometimes* try the stochastic < 20 on new coins in a lower TF (i.e. 1h) and if it coincides with RSI oversold and logical levels and patterns and volume profile, you can take a punt. Did not do that myself, as I don’t trade meme coins.
Another factor for the gigantic price increase could be investor psychology. NewsBTC analyst Tony Spilotro says:
This is what price discovery is like in crypto. The reason we see it more in fresh newly hyped coins is there aren’t really any bag holders at a loss yet looking to dump at every rally. So they just hold and hold and price go up.
At press time, PEPE was trading at $0.000001673. As NewsBTC reported, PEPE is still waiting for a listing on Binance. During a recent AMA, CEO Changpeng Zhao said that the listing process on Binance is “dictated by user interest.”
So if the trend continues, it should only be a matter of time before PEPE is listed on Binance and experiences the obligatory “Binance pump.” Investors should ask themselves, however, if this could be the top signal for the meme coin.
Featured image from Binance Feed, chart from TradingView.com
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