Short-sellers experienced a volatile weekend due to the declining value of Bitcoin [BTC], providing them with an opportunity to generate profits. PEPE also followed suit, with short-sellers who entered the market at $0.000010 already securing a 15% profit currently.
Is it possible for shorting to result in further gains before the conclusion of the U.S. election?
PEPE Testing October Support Levels
As of now, PEPE’s 15% drop has brought it down to its October support level. A breach below this support might encourage bears to drive PEPE even lower to attain more profits.
If the October support is broken, late sellers and early bear investors could push PEPE towards $0.0000080 or the lower support range at $0.0000070 (cyan). This move could potentially lead to a total gain of around 30% for short-sellers if the price drop reaches the latter target.
Given that the market direction and potential reversal could be influenced by the outcome of the U.S. election, it would be wise to consider taking partial profits earlier.
It is worth noting that the below-average RSI reading has strengthened the position of bears, while the tepid OBV has supported the bearish perspective.
However, a sudden reversal in Bitcoin’s trend could invalidate the short position. In this scenario, the 50-day EMA (exponential moving average) and the trendline resistance (white) could become significant bullish targets in a recovery situation.
Decline in PEPE Active Addresses
Since late October, there has been a notable decline in active addresses for PEPE, indicating reduced market engagement and interest. This development has further supported the bearish sentiment, particularly leading up to the announcement of the U.S. election results.
Furthermore, the PEPE long/short ratio suggests that approximately 58% of positions are net short on the meme-themed coin, reinforcing the bearish outlook and providing another rationale for shorting the coin.
In summary, the current turbulent market conditions present a favorable opportunity for short-sellers looking to maximize profits, including PEPE holders. However, these gains may be achievable only before the market stabilizes post the U.S. election outcome.
For investors considering holding onto PEPE, acquiring it at discounted prices during this period of panic could prove beneficial in the medium term, particularly if the market experiences significant recovery following the elections.