Pepe Coin (PEPE) is at a crucial juncture, teetering on the edge of losing a significant support level as key technical indicators show signs of weakness. The coin's price has dropped sharply, raising concerns about its ability to maintain its current levels and the potential for further declines if support fails.
Why is Pepe Coin Price Dropping?
Pepe Coin's recent decline is part of a broader market downturn, sparked by Bitcoin falling below its crucial $60,000 support level. This drop in Bitcoin's price, which saw a 3.4% decrease between August 26 and 27 after losing the $63,500 support, has negatively impacted altcoins like PEPE. The overall crypto market also suffered, losing 6.7% of its value in the last 24 hours, while PEPE dropped 10.4%.
The downturn is likely driven by a worsening macroeconomic outlook and reduced activity on the Bitcoin network, which has reverberated across the market. Despite these challenges, large investors continue to show confidence in the long-term potential of the market. For instance, BlackRock recently purchased an additional 3,500 BTC, taking advantage of the price dip, which suggests that institutional players remain bullish despite short-term volatility.
As PEPE approaches a critical support level, some on-chain metrics provide a glimmer of hope, indicating the potential for recovery.
PEPE Profitability and Whale Activity
Data from Santiment shows that the daily profit ratio for PEPE has dropped to 0.34, its lowest since August 23. This means that for every transaction closed in loss, only 0.34 transactions were closed in profit, highlighting that most recent PEPE transactions have resulted in losses. Additionally, the Coinglass Crypto Derivatives Visual Screener indicates an increase in short positions on PEPE, reflecting bearish sentiment among traders.
Despite the decline in profitability, trading activity surged on August 28, shortly after PEPE's price drop. This spike in activity, the largest since August 24, saw 2,844 active addresses transacting over 1.07 trillion PEPE. Notably, there were 16 whale transactions worth $100,000 or more, and one transaction exceeding $1 million. Following this surge, PEPE's price began to slowly recover, suggesting that both whales and retail traders may have seized the opportunity to buy more tokens at lower prices.
MVRV Indicates Potential Rebound
The 30-day and 365-day Market Value to Realized Value (MVRV) ratios have fallen into the oversold zone, signaling that PEPE may be undervalued and could be due for a rebound. The next major support level for PEPE is around $0.00000700. If this level holds, the coin might avoid further losses and could even rebound. However, if PEPE fails to stay above this support, it could drop further to $0.00000600.
Should PEPE successfully bounce from the $0.00000700 level, it may retest the upper boundary of its current range around $0.00000900. Breaking through this resistance could result in a significant surge, potentially driving the price up by 43% to reach $0.00001280.
As Pepe Coin navigates this critical support test, the coming days will be crucial in determining whether it can recover or face further declines.
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