The recent surge in the cryptocurrency market, spearheaded by Bitcoin, has catalyzed notable advancements in memecoin projects. On May 27, Pepe (PEPE) reached an all-time high in price, largely influenced by the approval of Ethereum exchange-traded fund (ETF) applications in the US. This approval has led investors to perceive Ethereum-based memecoin projects as high-risk yet potentially high-reward opportunities.
PEPE’s Record-Setting Performance
PEPE’s price surged by 7.60%, hitting an unprecedented $0.00001725. This follows an 88% increase since the US Securities and Exchange Commission (SEC) approved Ethereum ETF applications on May 20. Similar trends were observed in other Ethereum-standard memecoins like Dogecoin, Shiba Inu, and Mog Coin (MOG), which also experienced significant price hikes post-ETF approval.
However, the current upward trajectory of PEPE might face challenges in the near term. The growing disparity between increasing prices and a declining daily relative strength index (RSI) suggests potential market exhaustion.
What is Happening on the PEPE Front?
PEPE’s waning bullish momentum hints at a possible price reversal, echoing a similar 40% decline in memecoin projects earlier this year when rising prices diverged from falling RSI trends. The daily RSI for PEPE has already surpassed 70, entering the overbought zone, which often precedes a market correction or consolidation phase. This raises the likelihood of a sell-off following its robust performance.
If a market correction occurs, PEPE’s price might drop to around $0.00000965 by June, marking a 40% decrease. On the contrary, if the uptrend persists, PEPE could test the 2.618 Fibonacci retracement level around $0.00002203, indicating a potential 32% rise from current levels in the coming weeks.
Key Insights for Investors
– Monitor RSI levels closely as they provide critical overbought or oversold signals.
– Be aware of large token holders’ actions, as their sell-off can influence market trends.
– Consider the impact of ETF approvals on Ethereum-based projects.
– Assess the risk of potential price corrections following significant rallies.
PEPE’s bearish technical outlook is further reinforced by profit-taking behaviors among its largest investors. Throughout the market uptrend, entities holding over 1 billion tokens have reduced their PEPE supply, indicating that whales are selling at local price peaks. Consequently, the supply held by smaller investors is on the rise.