The altcoin market has been watching a new meme-coin bull since mid-April. Following Dogecoin, Shiba and Floki, Pepe Coin reached the top 100 by volume and market capitalization of $500 million. Traders are now expecting a massive short burst on the altcoin.
This altcoin faces huge bearish positions in the derivatives market
Pepe Coin has skyrocketed to over $500 million in market capitalization in about two weeks since its launch. Still, the funding rates remain negative in the perpetual futures it is linked to. This shows the dominance of bearish positions in the derivatives market.
A perpetual futures contract is a contract with no expiration date to buy or sell at a predetermined price. Exchanges that offer perpetual futures charge the financing rates or costs of holding long (bullish) and short (bearish) positions to keep prices tied to the spot market.
A negative funding rate indicates that short positions are dominant and they are willing to pay long positions to keep bearish positions open. In other words, most traders expect prices to drop. A positive funding rate indicates the opposite.
Here, hedging is primarily responsible for PEPE’s negative funding rates from day one. This is because my small-volume meme tokens tend to be more volatile than the market leaders Bitcoin and Ether. These coins can show big fluctuations in a short time.
“PEPE’s last rally was driven by shorts”
While funding rates reflect the bearish market trend, they also point to short-term pressure, an uptrend triggered by the mass dissolution of bearish shorts. The wealth of sellers in the market means that prices should fall. Otherwise, the cost of funding becomes too burdensome for the bears.
According to data monitoring platform Laevitas, PEPE’s recent rally may have been partly driven by short selling.
Pepe Coin bulls, watch out for these 3 red flags
First, PEPE’s daily trading volumes fell on centralized and decentralized exchanges as prices fell. The same was true on Google Trends for the keyword “Pepe Coin,” whose score dropped from 100 to 7 in one day. This shows that individual investor interest has decreased in the last 48 hours.
On the other hand, Pepe Coin is largely controlled by whales, according to data tracked by the CoinCarp website. The top 100 PEPE addresses, aka “whales,” control 45% of the circulating supply of the token.
Also, there are some scandalous allegations about Pepe Coin. Lookonchain revealed that five addresses linked to the Pepe team made $1.23 million in profits. They bought 8.87 trillion PEPE at a low price. They then sold over 90% of the tokens on Uniswap at a higher price. cryptocoin.com We have included the details in this article.
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