Pepe (PEPE) experienced a significant surge in price on May 27, reaching a new all-time high. This surge was primarily driven by the recent approval of Ether (ETH) exchange-traded fund (ETF) filings in the United States. As a result, traders have started to view 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 surge in the Pepe market may soon come to an end. A growing divergence between rising prices and falling daily relative strength index (RSI) suggests a potential price reversal. This situation is reminiscent of the 40% crash experienced by memecoins in January, which followed a similar divergence between increasing prices and declining RSI trends.
Furthermore, PEPE’s daily RSI has already crossed over into overbought territory, surpassing 70. 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 year-long performance.
In the event of a correction, PEPE’s price could potentially fall towards its 50-day exponential moving average (50-day EMA), currently around $0.00000965. This represents a 40% decrease from the current price levels, similar to the price correction observed prior to the bearish divergence signal in January.
On the other hand, if the uptrend continues, PEPE could test its 2.618 Fibonacci retracement level near $0.00002203 in the coming weeks, indicating a potential 32% increase from the current price levels.
Furthermore, the bearish technical outlook of PEPE is reinforced by the profit-taking activities of its wealthiest investors. The supply of PEPE held by entities with balances exceeding 1 billion tokens has been decreasing during the market uptrend, indicating that these “whales” have been selling at local price peaks. In contrast, the supply of PEPE held by smaller investors has increased.
However, there have been instances where individual traders have withdrawn millions of dollars worth of PEPE tokens from exchanges after the recent price surge, indicating their intention to hold the memecoin instead of selling it at its current highs. The impact of these withdrawals on the overall whale supply data is yet to be seen, further increasing the correction risks for PEPE in June.
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.