,Pepe (PEPE) price surged to a record high on May 27, a surge driven by the recent approval of key Ether (ETH) exchange-traded fund (ETF) filings in the U.S., leading traders to view Ethereum-based memecoins as high-risk, high-reward opportunities.
PEPE's price jumped by 7.60%, reaching an all-time high of $0.00001725. This represents an impressive 88% increase since the U.S. Securities and Exchange Commission (SEC) approved the Ether ETF filings on May 20.
Other Ethereum-standard memecoins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Mog Coin (MOG), also posted substantial gains following the ETF filings approval.
PEPE/USDT versus DOGE/USD, SHIB/USD, and MOGUSDT daily price performance chart. Source: TradingView
PEPE fractal suggests a 40% price correction in June
The ongoing rally in the Pepe market may exhaust in the coming weeks due to a growing divergence between its rising prices and falling daily relative strength index (RSI).
PEPE/USDT daily price chart. Source: TradingView
PEPE's "bearish divergence" indicates that the upward momentum is weaker than the rising price action suggests and could signal a potential price reversal. This situation is reminiscent of the memecoins' 40% crash in January, which followed a noticeable divergence between their increasing prices and declining RSI trends.
Additionally, PEPE's daily RSI has already crossed over 70, an overbought zone that typically precedes a period of price correction or consolidation. This further heightens sell-off risks in the PEPE market after its yearlong strong performance.
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In the event of a correction, PEPE's price could decline towards its 50-day exponential moving average (50-day EMA; the red wave) at around $0.00000965 by June, a decrease of approximately 40% from current price levels. This is similar to its price correction following its bearish divergence signal in January.
Conversely, a sustained uptrend could see PEPE testing its 2.618 Fibonacci retracement level near $0.00002203 in the coming weeks, an increase of approximately 32% from current price levels.
PEPE/USDT daily price chart. Source: TradingView
Wealthiest PEPE investors are selling
PEPE's bearish technical outlook is further supported by the ongoing profit-taking activities of its wealthiest investors.
During the market uptrend, the supply of PEPE held by entities with balances exceeding 1 billion tokens has decreased. This suggests that these "whales" have been selling at local price peaks. Consequently, the supply of PEPE held by smaller investors has increased.
PEPE supply distribution. Source: Santiment
However, there have been instances where traders have withdrawn millions of dollars worth of PEPE tokens from exchanges after the latest pump, indicating their intention to hold the memecoin rather than sell it at its current highs.
Source: X
The impact of these withdrawals on the overall whale supply data remains to be seen, but they further highlight PEPE's correction risks in June.
This article does not provide investment advice or recommendations. All investments and trading involve risk, and readers should conduct their own research before making any decisions.