Currently, memecoins are experiencing downward pressure in the aftermath of a recent market pullback. As of the latest data, the total market capitalization of memecoins has seen a decline of approximately 1.2%, totaling $79 billion.
Despite these bearish trends, PEPE [PEPE] has stood out by recording a 7% increase in a 24-hour period, trading at $0.0000099 at the time of reporting. Nevertheless, the absence of significant whale activity could pose a challenge to a sustained upward trend.
Potential Obstacles to PEPE’s Price Surge
Insights from IntoTheBlock reveal that in the past day, substantial PEPE transactions exceeding $100,000 have surged by four times, rising from 8 trillion to 31.9 trillion. However, this surge seems to be primarily fueled by selling actions.
The netflows from large holders have witnessed a notable decline, dropping from 159 billion to -37 billion, indicating that whales have sold off 196 billion PEPE within a 24-hour timeframe.
When significant holders are offloading their assets, it signals a decrease in investor trust, which is likely to put pressure on the coin’s price.
Given that whale addresses held 48% of the memecoin’s supply, if they are moving towards a distribution phase, it could exert downward influence on the market sentiment.
Critical Levels to Monitor
Sellers are currently dictating the price movement, with the Relative Strength Index (RSI) plummeting to 30.
Moreover, the RSI line is persistently oscillating below the signal line, affirming the prevailing bearish momentum.
If PEPE fails to hold the support at the lower Bollinger band ($0.00000906), it may witness a drop to hit the liquidity pool at $0.00000796.
On the other hand, maintaining control by the bulls and surpassing the resistance level at $0.000014 could ignite a robust bullish trend. Traders should closely observe any potential reversal of the RSI line.
A reversal towards the positive direction, crossing above the signal line, would reflect growing buying pressure capable of triggering price gains.
Short Sellers Leading the Market
The prevailing bearish sentiment surrounding PEPE is evident in both the spot and derivatives markets.
As per Coinglass, Open Interest has surged by 6% within a day, reaching $268 million. However, the majority of these open positions originate from short sellers. The negative Funding Rates for PEPE over the past two days indicate a strong demand for short positions.
The Long/Short Ratio has dwindled to 0.95, revealing a higher number of traders engaging in short positions compared to long positions.
The surge in short sellers indicates a pessimistic outlook on PEPE, with many traders anticipating price dips.
Nonetheless, such a scenario could pave the way for a rally if an abrupt surge prompts the forceful closure of these short positions.