The market valuation of Pepecoin (PEPE) has dropped by 65% as of May 12, a week after its record high of $1.54 billion.
Profit-taking appears to be the primary reason behind the extreme price correction, after it rallied from almost nothing to as high as $0.00000372 after its launch on April 14, while emerging as the fastest-growing ERC-20 token in the crypto market's history.
What is PEPE?
Pepecoin captures people's attention by mimicking features of memecoins, based on popular internet memes. The most well-known is Dogecoin (DOGE), which uses the famous Shiba Inu dog meme as its logo.
Pepecoin is based on the "Pepe The Frog" meme, created by Matt Furie in his 2005 cartoon “Boys Club.” The humanoid frog went on to become a mainstream meme in the mid-2010s, with singers Katy Perry and Nicki Minaj using it in their tweets.
Australian jet lag got me like pic.twitter.com/kriAAd6mZe
— KATY PERRY (@katyperry) November 8, 2014
In 2021, BarnBridge founder Tyler Ward launched a low-resolution Pepecoin NFT collection that reaped over $60 million in sales on the OpenSea auction platform.
Similarly, the anonymous team behind Pepecoin has leveraged the meme's current popularity on Twitter.
They catalyzed early adoption by creating a coordinated meme campaign. Simultaneously, the media ran stories about early PEPE investors turning thousands of U.S. dollars worth of investments into millions within a week, prompting more people to join the frenzy.
For instance, the number of PEPE holders has grown from negligible to over 105,000 in a month, according to CoinCarp.com.
But despite these positive price catalysts, Pepecoin remains without any real use-case for the average person. This isn't unlike Dogecoin, however, whose shot-to-fame in recent years has more to do with Elon Musk's support than its utility as a token.
Can PEPE flip Dogecoin, Shiba Inu?
PEPE is still only about 5% of Dogecoin's market cap of over $10 billion. It's also 10% of the second-largest memecoin Shiba Inu's (SHIB) with a market cap of around $5 billion.
"It wouldn’t be surprising to see PEPE surpass both at some point, if only momentarily, now that it has gained legitimacy," argues Chase Devens, a researcher at Messari. The immediate listings across popular centralized crypto exchanges like Binance are the primary reason for the rapid rise in valuation, adds Devens..
For instance, SHIB's first centralized exchange listing appeared more than 260 days after launch. In comparison, PEPE's centralized exchange debut occurred only six days after launch. And 22 days later, the token started trading on Binance, the world's largest crypto exchange by volume.
"Not only do these integrations lower the barrier for retail speculation, they also enable large capital providers to provide off-chain market making services," Devens notes, adding:
"PEPE perpetual futures are now available on exchanges like Binance and Bybit to give users access to 100x leverage against PEPE’s price. In only a few days, PEPE derivative volumes have already surpassed daily spot trading volumes."
The launch of PEPE also coincides with the 100% rise in Uniswap’s daily active users on Ethereum, now approaching its all-time high of 90,000 from May 2021.
Most of these users have engaged in memecoin trading, which includes other newly-launched tokens such as WOJAK, TURBO, and AIDOGE.
More pain ahead for PEPE price?
As a note of caution, the excitement and growth of PEPE shows similarities with the final phase of 2021's memecoin bull run.
Related: Pepe would be ashamed by PEPE investors
Notably, PEPE's short-term gains appear identical to DOGE's price rally on the weekly charts. Also, its ongoing correction looks similar to DOGE's 90%-plus decline from its record high of $0.75 in May 2021.
In other words, Pepecoin's price could extend its ongoing correction in the short term toward $0.00000083, or 35% below the current price levels.
Moreover, a Dogecoin-like 90% crash from the market top would bring PEPE's price to $0.00000035, which served as resistance in April 2023.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
