Attention: Urgent warning – This digital currency faces a potential crash of up to 30%
The viral coin frenzy has returned to the cryptocurrency market, and one particular digital asset, PEPE, is showing signs of being severely overvalued. Experts are now predicting a long squeeze scenario, and several factors, including increased open interest (OI), high funding rates, and a rising number of liquidations, support this concern.
A similar phenomenon occurred in the past, where the meme coin boom led to a market crash and significant losses for long-position holders. Despite positive endorsement from influential industry figures, there is a growing risk that history may repeat itself for this asset class.
Currently, PEPE boasts a staggering $736.69 million in open interest, making it the fifth highest in this category on CoinGlass. This value represents a significant 11% of the coin’s overall market cap, which currently stands at $6.39 billion. In fact, PEPE’s open interest is even higher than that of XRP, a digital asset with a market cap of $29.73 billion.
Despite a recent decline in 24-hour volume by 37.82%, the overall open interest on PEPE has surged by 8.85%.
Of particular concern are the funding rates for PEPE on various exchanges. These rates reveal a heavy bias towards long positions in the market. Currently, traders holding long positions are paying an annual percentage rate (APR) of 52.66% to PEPE short-sellers, as a means to rectify derivatives imbalances.
This steep funding rate not only heightens the risk of a potential long squeeze crash but may also prompt traders to abandon their bullish positions.
Adding to the alarm, the liquidation heatmap for the upcoming week indicates a potential liquidation price target of $0.0000107 per token for leveraged PEPE traders. Therefore, if market sentiment shifts from bullish to bearish, this meme coin could experience a devastating crash via a long squeeze scenario.
Should PEPE indeed drop to this target price, traders who purchased at current levels would incur substantial losses of approximately 30%.
Despite these warnings, it is important to note that further capital inflows could potentially prolong the coin’s ascent in the near future. However, given the volatile nature of cryptocurrencies, traders and speculators alike are advised to exercise extreme caution moving forward.
Disclaimer: The information provided on this platform should not be considered as investment advice. Investing in digital assets carries inherent risks, and the investor’s capital is at stake.