Pepe (PEPE) is currently under significant bearish pressure, with technical indicators suggesting the potential for further downside. The price of PEPE has been declining throughout the week, and its close correlation with Ethereum (ETH), which has also experienced negative movement, is likely contributing to this downturn.
Bearish Momentum Continues for PEPE
Despite a slight decrease in the overall crypto market cap by 2.1% and positive netflows for Bitcoin ETFs, PEPE's price has dropped by 0.9%. The high correlation between PEPE and Ethereum is a key factor, as the recent negative netflows in the ETH ETF on August 15 led to a 2.9% drop in Ethereum's price, further influencing PEPE's performance. As a result, PEPE is struggling to hold up against the persistent sell pressure.
Mixed Signals from Exchange Netflows
PEPE's exchange netflows present a mixed picture. On August 15, PEPE's exchange reserves dropped by 1.44 trillion tokens (worth $10.89 million), which is typically a bullish signal indicating that investors are holding onto their tokens for the long term. However, despite this reduction in exchange reserves, PEPE's price continued to decline, losing 4% over the past 24 hours to trade at $0.00000751.
This discrepancy could be due to investors shifting their PEPE tokens to other exchanges or decentralized platforms to capitalize on arbitrage opportunities. Additionally, data from Coinglass shows that PEPE's open interest (OI) and Cumulative Volume Delta (CVD) are both decreasing, indicating that traders are closing their long positions, likely resulting in losses. The funding rate (FR) is currently negative, further suggesting that shorts are building up, potentially driving the price down even more.
Adoption Remains Strong Despite Price Decline
Despite the ongoing price struggles, PEPE continues to see strong adoption. According to CoinCarp, PEPE has been adding an average of 430 new holders per day over the past 30 days, a level of consistent growth typically seen in more established coins like Bitcoin, Ethereum, and Solana. This steady increase in adoption is a bullish signal for PEPE and could indicate a future price recovery.
Technical Analysis Points to Further Downside
Technical analysis shows that PEPE is maintaining a broader downward trend. A recent breakdown from a symmetrical triangle pattern, confirmed by a large red candle, indicates a strong bearish breakout and the continuation of the downtrend. PEPE is likely to find support around the $0.00000680–$0.00000700 range, which corresponds to its previous low. If the price bounces from this support level, it could form a double-bottom bullish reversal pattern, potentially leading to a significant rally of over 105% to $0.00001280.
However, indicators like the Bollinger Bands and Chaikin Money Flow (CMF) suggest that PEPE is currently in an oversold condition, with money flowing out of the asset, supporting the bearish outlook. While the longer-term trend remains downward, the continued adoption of PEPE could spark a trend reversal. A successful test and bounce from the $0.00000650 support zone could complete a potential bullish reversal pattern, with the next target set at $0.00001280.
In summary, while PEPE faces significant bearish pressure in the short term, its strong adoption rates and potential for a bullish reversal offer a glimmer of hope for the future. Investors should closely monitor key support levels and market conditions to navigate this challenging period.
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