Market Cap Plunges $1B in 5 Days
Concerns Rise Over Pepe-Based Coin Scams
Whales Persist in Buying Amidst Decline
Pepe, a new memecoin that gained popularity in recent weeks, has experienced a significant decline in its market capitalization, with a loss of $1.1 billion within just five days. While the coin has witnessed a sharp drop of 56% in its price, some crypto whales are still buying. However, concerns have been raised about the legitimacy of Pepe-based coins and potential scams associated with them. This article explores the recent decline of Pepe coin and sheds light on the growing apprehension surrounding meme coins and their inherent risks.
Pepe's Decline and the Influence of Asian Traders
According to reports from Matrixport, Pepe's sharp decline in price can be attributed to traders selling large portions of their holdings to new retail investors following the coin's listing on Binance, the world's largest cryptocurrency exchange. The data also indicates that the majority of Pepe's trading activity during its rally originated from traders based in Asia, with buying activity during Asian trading hours contributing significantly to the token's surge.
Additionally, the surge in Ethereum deposits following Pepe's listing suggests that early buyers sought to secure profits by converting their holdings back into Ether. These actions potentially contributed to the decline in Pepe's price as more investors liquidated their positions.
Whale Activity and Concerns of Scams
Despite the significant price decline, some well-known whales in the crypto space continue to purchase Pepe at reduced price levels. However, concerns about the legitimacy of Pepe-based coins and potential scams surrounding them have arisen.
One notable figure, Jeffrey Huang, also known as "Machi Big Brother," has reportedly purchased a substantial amount of Pepe, even amidst the declining market. Huang acquired 73.4 ETH (equivalent to approximately $137,000) worth of Pepe in the past four days. Such activities raise questions about the intentions and potential risks associated with investing in meme coins like Pepe.
The Inherent Valuelessness of Pepe
Pepe differentiates itself from other meme coins, such as Dogecoin and Shiba Inu, by openly proclaiming its lack of intrinsic value or financial return expectations. The anonymous development team behind Pepe has emphasized that the token is entirely useless and intended for entertainment purposes only. This approach may attract investors who appreciate the humor and novelty of investing in a token that openly declares its worthlessness.
The Rise of Meme Coin Speedruns and Potential Scams
Meme coins, including Pepe, have experienced a surge in popularity recently. Digital artist Johnny Shankman showcased the creation of a meme coin called EASY_MONEY in a 27-second video, demonstrating how simple it is to create such tokens using smart contract templates. Shankman's video went viral, and other individuals subsequently attempted to break the speed record for creating meme coins.
While these speedruns may appear entertaining, they raise concerns about the potential for scams. The ease of creating meme coins could lead to an oversaturation of unproven tokens, increasing the risk of rug pulls, where the development team disappears, causing the value of the token to plummet.
Conclusion
Pepe's market cap has experienced a significant decline, erasing $1.1 billion within a short period. Despite this, some prominent crypto whales continue to invest in Pepe at reduced prices. However, concerns regarding Pepe-based coins and the potential for scams have emerged within the crypto community. The growing popularity of meme coin speedruns also raises questions about the risks associated with unregulated tokens. Investors should exercise caution and conduct thorough research before engaging with meme coins to protect themselves from potential scams and rug pulls in the ever-evolving cryptocurrency landscape.