Pepe absolutely exploded after launching in April 2023, with the price skyrocketing 10x in just its first few months. Classic meme coin behavior during a bull market.
After that initial 10x, it’s been a ride of ups and downs. PEPE token has had some decent rallies throughout 2024 and into this year, but nothing that has matched the original pump. The charts have shown some promising setups and technicals that had analysts asking : Can history repeat itself?
Gerhard, a crypto analyst with 140 thousand subscribers on Youtube has analyzed the Pepe meme coin, which has been performing remarkably well on the Ethereum chain. Despite the impressive 77% increase in value, making it the third largest meme coin with a market cap of about 5.6 billion, Gerhard remains cautious about its future prospects.
The Numbers Behind Pepe’s Performance
Gerhard points out that much of Pepe price appreciation isn’t solely due to Pepe itself but rather to Ethereum price increase.
This connection is critical because Pepe, like most altcoins, is directly linked to Ethereum. The price ratio between Pepe and wrapped Ethereum determines the token’s value. When Ethereum rises by 10%, Pepe automatically increases by the same percentage, even without any trades occurring.
Gerhard examines the on-chain metrics, noting that while Pepe has over 400,000 holders, they vary significantly in their holdings. Some wallets hold just cents worth of tokens, while others contain hundreds of thousands of dollars.
What is Really Driving PEPE Price?
The most concerning insight from Gerhard’s analysis is the disconnect between price movement and investor behavior. When analyzing wallet data across different investor sizes (retail investors with around $1,000, medium investors with $10,000, and whales with $100,000+), he discovered something unusual.
The number of retail investors has remained relatively decreased, while medium-sized investors and whales have actually been decreasing. This raises the question: how can the price climb so dramatically when no one seems to be buying?
Gerhard believes the answer lies in short-term leverage. Price discovery isn’t happening on-chain anymore but rather on the perpetual futures market. In a 24-hour period, Binance saw spot trading volume of 350 million for Pepe, while the perpetual futures market had 1.5 billion in trading volume.
This heavy reliance on futures trading makes Pepe what Gerhard calls “a ticking time bomb.” The open interest (amount of bets on the price) has been increasing more rapidly than the price itself, indicating growing leverage in the system. Despite this, there haven’t been many liquidations yet, suggesting traders remain confident in their predominantly long positions.
Read Also: 400 XRP vs. 3,400 XLM: Which Is the Better Long-Term Bet?
However, Gerhard warns that if bullish sentiment around PEPE token increases and the financing cost for long positions rises to late-2024 levels, the price could collapse dramatically. He reminds viewers that previous crashes have seen Pepe lose up to 78% of its value.
Gerhard is staying away from PEPE entirely, viewing it as a “player versus player game” dominated by market makers and sophisticated traders. He emphasizes that cryptocurrency markets aren’t purely efficient – they’re influenced by both luck and skill, with winners tending to continue winning due to superior information and analysis.
Follow us on X (Twitter) and Coinmarketcap for more real-time market updates.
The information provided on Web3parrot.com is for general informational purposes only and are opinions of the expert writers. They are not intended as financial, investment, or trading advice. Please do your own research and consult with a licensed financial advisor before making any financial decisions.
