Crypto Memecoin Mania Begins to Cool Shortly After Latest Renaissance
(Bloomberg) – A rally in some of the most speculative cryptocurrencies appears to be ending just as quickly as fresh memecoins like Pepe have reignited visions of instant riches among online believers.
The token, which is associated with an internet meme of a green anthropomorphic frog that has been around since the early 2000s, is down about 12% on Wednesday, according to data site CoinGecko. It’s up more than 1,800% since its launch in April, while still trading at a fraction of a cent.
As is often the case, big traders are taking advantage of the recent frenzy among retail investors, who usually have the proverbial pockets in their hands when prices plummet. Etherscan blockchain data shows that there are about 80,000 digital wallets with Pepe tokens, and excluding the wallets belonging to exchanges, several dozen individual wallets holding at least $1 million of the tokens.
“There are many large holders who jumped in early, and the token price has surged since then,” said Xi Yin, research analyst at blockchain data firm Nansen. “So when they take profits, it tends to move the price and market cap significantly as people tend to follow the movement of these ‘whales,'” an industry nickname for investors who hold a large amount of a particular cryptocurrency.
Legacy virtual coins popularized by the online hype, including Dogecoin and Shiba Inu, have been caught up in the recent boom-and-bust cycle. Major cryptocurrencies like Bitcoin and Ether were mostly little changed on Wednesday.
Some retailers already appear to be taking losses. As Bloomberg previously reported, a crypto trading bot operator posted profits of more than $1 million by using a strategy dubbed “sandwich attacks” against investors who bought large amounts of the tokens. Meanwhile, Nansen’s data also shows that several “whales” offloaded more than $1 million in Pepe tokens over the past day.
According to data from CoinGecko, the majority of the trading volume is accounted for by the exchanges OKX and MEXC Global as well as the decentralized exchange Uniswap. BitMex started supporting perpetual swap contracts for Pepe coins on its trading platform. Perpetual swaps are a type of futures contract that do not expire, in which case they offer leverage of up to 50 times the value of the underlying asset.
“Retail participation and rising trading volumes are favorable for exchanges,” said Ben Yorke, vice president of ecosystems at crypto trading platform WOO Network, who also warned that memecoin craze is often a signal of market foaming.
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