Pepecoin (PEPE) experienced a 65% decrease in its market valuation on May 12, a week after reaching its record high of $1.54 billion. The primary reason behind the extreme price correction is profit-taking. After its launch on April 14, Pepecoin rallied from almost nothing to as high as $0.00000372, emerging as the fastest-growing ERC-20 token in the crypto market’s history.
Pepecoin Mimics Features of Memecoins to Capture Attention
Pepecoin mimics features of memecoins that are based on popular internet memes. It is based on the “Pepe The Frog” meme, created by Matt Furie in his 2005 cartoon “Boys Club”. The humanoid frog became a mainstream meme in the mid-2010s, with singers Katy Perry and Nicki Minaj using it in their tweets. Pepecoin’s anonymous team has leveraged the meme’s current popularity on Twitter by creating a coordinated meme campaign to catalyze early adoption. 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. The number of PEPE holders has grown from negligible to over 105,000 in a month, according to CoinCarp.com.
Despite the positive price catalysts, Pepecoin remains without any real use-case for the average person. It’s 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.
Chase Devens, a researcher at Messari, argues that it wouldn’t be surprising to see PEPE surpass both at some point, if only momentarily, now that it has gained legitimacy. The immediate listings across popular centralized crypto exchanges like Binance are the primary reason for the rapid rise in valuation.
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.
As a note of caution, the excitement and growth of PEPE shows similarities with the final phase of 2021’s memecoin bull run. Pepecoin’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. A Dogecoin-like 90% crash from the market top would bring PEPE’s price to $0.00000035, which served as resistance in April 2023.