Pepe Memecoin Craze Attracts ScammersThe newest meme coin sensation, PEPE, has taken the cryptocurrency world by storm, amassing a market capitalization of over $500 million in just over two weeks since its launch.
This rapid growth, however, is accompanied by negative funding rates in perpetual futures tied to the token, signaling a dominance of bearish positions in the derivatives market.
The short squeeze effect
Funding rates for PEPE have been consistently negative since day one, possibly due to the hedging activity of traders and early investors who are shorting perpetual futures to protect their long positions in the spot market from potential price drops.
This bearish market sentiment has created conditions conducive to short squeezes, where mass unwinding of bearish short positions can cause prices to rally. Data from the tracking platform Laevitas indicates that PEPE’s recent rally may have been driven in part by a short squeeze.
US music artist Soulja Boy has taken to Twitter to endorse the trendy meme coin. The meme coin, which is based on the popular Pepe the Frog internet meme, has outperformed established meme cryptocurrencies like Dogecoin and Shiba Inu.
US music artist Soulja Boy has taken to Twitter to endorse the trendy meme coin PEPE. The meme coin, which is based on the popular Pepe the Frog internet meme, has outperformed established meme cryptocurrencies like Dogecoin and Shiba Inu.
Cryptocurrency influencer David Gokhshtein has also reported observing a large number of transactions where people are selling their SHIB holdings to buy the memecoin.
According to CoinGecko, demand for meme coins remains strong, particularly in the United States, India, and the United Kingdom.
The sharp growth of PEPE in such a short time has piqued the interest of many users, leading to increased speculation. The hype-fueled meme coin has gained substantial attention on the decentralized exchange Uniswap, becoming one of the most researched coins on data platform Nansen.
PEPE-WETH liquidity pools on Uniswap have been among the most active in the past week, with nearly $900,000 in combined total accrued fees.
Liquidity challenges and market performance for PEPE
Despite the surge in liquidity pool activity, some traders experienced significant slippage when attempting to convert large amounts of PEPE for other currencies, such as ether, due to a lack of liquidity.
PEPE’s trading volume has surpassed that of Dogecoin and Shiba Inu, the largest meme coins in the crypto ecosystem, and is currently listed on several centralized exchanges, including OKX, MEXC, and Huobi.
The new meme token’s rapid rise in popularity has caught the attention of major centralized exchanges. The meme coin’s listing on platforms like OKX, MEXC, and Huobi has played a crucial role in its growing trading volume and market exposure.
As more investors and traders become aware of PEPE and its potential, the demand for the meme coin could continue to surge.
While PEPE’s meteoric rise has undoubtedly captured the attention of investors and traders alike, it serves as a cautionary tale for those looking to enter the highly volatile world of meme coins.
The negative funding rates and potential short squeezes could lead to substantial losses for those who fail to adequately hedge their positions or get caught in the frenzy of a rapidly fluctuating market.
As with any investment, it is crucial for individuals to conduct thorough research and fully understand the risks associated with meme coins like PEPE before jumping in.
The PEPE mania has provided an exciting glimpse into the unpredictable world of meme coins, and its rapid expansion and market interest demonstrate the continued demand for these types of assets.
However, investors should remain cautious, as the complex dynamics of funding rates and short squeezes could pose significant risks for those who fail to navigate the market prudently.
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