Pepe Memecoin Soars, Faces Potential 40% June Crash

On May 27, the price of Pepe (PEPE) soared to an unprecedented high, fueled by the recent approval of several key Ethereum (ETH) exchange-traded fund (ETF) applications in the United States. This event led traders to consider Ethereum-based memecoins, such as PEPE, as high-stakes, high-return investment opportunities. Consequently, PEPE’s price surged by 7.60%, reaching an all-time high of $0.00001725. This remarkable growth signifies an 88% increase since the U.S. Securities and Exchange Commission (SEC) approved the Ether ETF applications on May 20. Other Ethereum memecoins like Dogecoin (DOGE), Shiba Inu (SHIB), and Mog Coin (MOG) experienced substantial gains following the ETF approvals.

Analysts suggest that PEPE’s rapid ascent might be short-lived. A growing divergence between its rising prices and its declining daily relative strength index (RSI) could signal an impending market correction. This phenomenon, known as a “bearish divergence,” implies that the upward momentum is not as robust as the price increases suggest. Such divergence often precedes a potential price reversal, much like the 40% crash in January that followed a similar pattern among memecoins.

PEPE’s daily RSI has surpassed the 70 threshold, entering the “overbought” territory. Typically, when an asset’s RSI exceeds this level, it indicates that a price correction or consolidation phase might be forthcoming. This significantly heightens the risk of a sell-off in the PEPE market, especially after its strong performance over the past year. In the event of a correction, the price of PEPE could plummet to its 50-day exponential moving average (EMA), around $0.00000965, reflecting a 40% decline from its current value. This mirrors the price correction seen after January’s bearish divergence signal.

If the upward trend continues, PEPE might test its 2.618 Fibonacci retracement level, projected near $0.00002203. This represents a potential 32% increase from its current price levels. This scenario hinges on sustained positive momentum in the market, prompting optimistic traders to hold on to their investments.

Adding to the bearish outlook, PEPE’s wealthiest investors have been engaging in profit-taking activities. The overall supply of PEPE held by entities owning more than a billion tokens has noticeably decreased during the market’s uptrend. This indicates that major holders, often referred to as “whales,” have been capitalizing on local price peaks by selling their holdings. As a result, the proportion of PEPE held by smaller investors has risen.

Interestingly, there are individual instances where traders have withdrawn millions of dollars worth of PEPE from exchanges after the recent price surge. This behavior suggests a desire among certain traders to hold onto the memecoin rather than sell it at its current high value. The overall impact of these withdrawals on the supply dynamics of major holders remains uncertain, which could further increase the risks of a market correction for PEPE in June.

As the situation evolves, it will be critical to monitor both the technical indicators and the behavior of large investors. The interplay between market sentiment, technical patterns, and whale activities will likely dictate PEPE’s near-term price trajectory. While the memecoin has shown impressive gains, its future remains uncertain, with potential for both significant growth and dramatic corrections.

While PEPE’s rise has been noteworthy, driven by favorable regulatory developments and market enthusiasm, various factors are converging to suggest that its current bullish phase might be nearing its end. Investors and traders should remain cautious, closely watching key technical signals and market movements to navigate the volatile landscape of cryptocurrency trading effectively.