Pepecoin (PEPE) is a meme coin that has taken the cryptocurrency world by storm. It has surged to an almost $1 billion market capitalization just weeks after its birth, and its value has continued to rise despite warnings of an impending collapse. In this article, we’ll explore the rise of Pepecoin and what makes it different from other cryptocurrencies.
What is Pepecoin?
Pepecoin is a cryptocurrency that was created in mid-April 2023. It is based on the popular internet meme “Pepe the Frog” and is intended to be a fun and lighthearted coin. Unlike other cryptocurrencies that are backed by a specific technology or platform, Pepecoin is a simple ERC-20 token that runs on the Ethereum blockchain.
The Surge in Value
Despite its lighthearted origins, Pepecoin has seen an incredible surge in value in the past few weeks. According to CoinGecko data, it has gained some 500% in the past two weeks alone. This surge has been driven by a combination of factors, including the popularity of the Pepe meme and the growing interest in cryptocurrency as a whole.
The Role of Whales
However, the surge in value has also raised concerns among some investors. These concerns center around the number of whales, or entities that hold large amounts of any token, that purchased Pepecoin in the hours after it was first issued. Some analysts have argued that this concentration of ownership could lead to price manipulation and a subsequent collapse in value.
The Rise of Short Interest
These concerns have led to a rise in short interest among futures traders. Shorts refer to bets against a token’s price. As CoinDesk reported, funding rates in perpetual futures tied to Pepecoin remain negative, indicating the dominance of bearish positions in the derivatives market. This negative funding rate indicates that shorts are dominant and are willing to pay longs to keep their bearish bets open.
The Losses of Traders
The dominance of bearish positions has led to losses for some traders. According to CoinGlass data, shorts against Pepecoin lost at least $11 million on several exchanges over the past 24 hours. Traders lost $5.5 million on crypto exchange OKX alone, which was the highest figure among counterparts. Traders lost another $2.2 million on Huobi, $3.6 million on Bybit, and a few hundred thousand dollars on BitMEX. All these exchanges started offering Pepecoin futures trading in the past week.
Liquidations and Their Impact
These losses have been significant, but they are not the first time that traders have experienced liquidations. Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. Large liquidations can signal the local top or bottom of a steep price move, which may allow traders to position themselves accordingly.