Pepe (PEPE) experienced a significant price surge on May 27, reaching a new all-time high. This surge was driven by the recent approval of Ether (ETH) exchange-traded fund (ETF) filings in the U.S. As a result, traders are now considering Ethereum-based memecoins as high-risk, high-reward opportunities.
The price of PEPE increased by 7.60%, reaching a record high of $0.00001725. This represents an impressive 88% increase since the approval of the Ether ETF filings by the U.S. Securities and Exchange Commission (SEC) on May 20.
Following the approval of the ETF filings, other Ethereum-based memecoins such as Dogecoin (DOGE), Shiba Inu (SHIB), and Mog Coin (MOG) also experienced significant gains.
However, there are indications that the ongoing upward trend in the Pepe market may soon come to an end. This is due to a growing divergence between rising prices and falling daily relative strength index (RSI) values. This “bearish divergence” suggests that the upward momentum may not be as strong as the rising prices indicate and could potentially lead to a price reversal. This situation is similar to the 40% crash experienced by memecoins in January, which followed a noticeable divergence between increasing prices and declining RSI trends.
Furthermore, the daily RSI for PEPE has already crossed over 70, indicating an overbought area. This typically precedes a period of price correction or consolidation, further increasing the risks of a sell-off in the PEPE market after its strong performance over the past year.
If a correction were to occur, PEPE’s price could fall towards its 50-day exponential moving average (50-day EMA) at around $0.00000965 by June, representing a 40% decrease from current price levels. On the other hand, if the uptrend continues, PEPE may test its 2.618 Fibonacci retracement level near $0.00002203 in the coming weeks, resulting in a 32% increase from current price levels.
To add to the bearish outlook, the wealthiest PEPE investors have been engaging in profit-taking activities during the market uptrend. The supply of PEPE held by entities with balances exceeding 1 billion tokens has decreased, indicating that these “whales” have been selling at local price peaks. As a result, the supply of PEPE held by smaller investors has increased. However, there have been instances where traders have withdrawn millions of dollars worth of PEPE tokens from exchanges after the latest price surge, indicating their intention to hold the memecoin instead of selling at current highs.
It remains to be seen how these withdrawals will impact the overall whale supply data, further increasing the risks of a correction in PEPE’s price in June.
Please note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.