Short Alert: PEPE May Be in for a 30% Plunge 🔥🔥

The market is once again in the meme coin craze, and cryptocurrencies like PEPE are showing signs of being overvalued.

This could signal a long squeeze, as indicated by increased open interest (OI), high funding rates, and falling cumulative liquidations.

Previously, the meme coin craze marked a local peak, followed by a market crash and a large number of long positions being liquidated. If a similar pattern occurs, the asset class could suffer another blow despite the active social activities of influencers.

At the time of posting, PEPE's open interest is worth $736.69 million.

This value accounts for 11% of the meme coin's $6.39 billion market cap, which is trading at $0.0000151. Notably, PEPE's OI is larger than XRP's open interest, which has a market cap of $29.73 billion.

Despite a 37.82% drop in 24-hour trading volume ($3.07 billion), the meme coin’s market open interest has surged by 8.85%.

Specifically, the funding rate for PEPE across composite exchanges shows that open interest is skewed towards long positions.

Currently, traders with long positions pay 52.66% APR to PEPE short sellers as a mechanism to cover the derivative imbalance. Such a high funding rate could accelerate a long squeeze on the meme coin, or at least incentivize traders to close these bullish positions.

Furthermore, the one-week liquidation heat map shows that for leveraged PEPE traders, the liquidation price target could be $0.0000107 per token.

Therefore, the meme coin could experience a long squeeze crash if market sentiment turns from bullish to bearish. A price drop to this target would result in a 30% loss for traders who bought PEPE at the current price.

However, if there is enough inflow over the next few days, the rally could continue. Cryptocurrency traders and speculators must understand the volatility of these digital assets and proceed with caution.

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