Quick Read
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Pepe surged 23% in a week to become the top performer among the 50 largest cryptocurrencies, even as Bitcoin slipped 1%.
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PEPE's rally may have been driven by a short squeeze rather than spot buying, as total crypto trading volume fell 25% during the surge.
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Dogecoin and Shiba Inu each fell roughly 2-3% during PEPE's rally, ruling out a broad memecoin rotation as the cause.
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Pepe(CRYPTO: PEPE) has surged 23.4% in the past week, making it the top performer among the 50 largest cryptocurrencies. Pepe's price stands at $0.00000507, up 13.4% in just 24 hours—a significant daily gain not seen since at least October 10.
In contrast, Bitcoin(CRYPTO: BTC) has slipped 0.9% over the week and is currently trading around $81,858. Memecoins are cryptocurrencies that often center on internet jokes or mascots, with no underlying business or revenue. So, what caused Pepe to rise sharply while Bitcoin faltered?
Is a Short Squeeze or Spot Buying Behind the PEPE Rally?
PEPE's upward trend occurred without major project announcements, exchange listings, or regulatory updates, even as external factors pressured the crypto market. For instance, on October 22, rising Brent crude oil prices erased previous daily gains for cryptocurrencies, amplifying inflation fears and dampening the appeal of speculative assets like crypto.
Stock traders' sentiment also deteriorated. The CBOE Volatility Index, or VIX, which gauges expected S&P 500 turbulence over the next month, rose to 19 on October 22, up 2.4 points from the previous day. This raises two possibilities for PEPE's rise, each suggesting a different future for the coin.
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Firstly, there could have been a short squeeze. Traders who short a coin profit when its price falls, often using leverage. If the price rises instead, exchanges may forcibly close losing positions, creating an effect similar to automatic buy orders. This can trigger a chain reaction, pushing prices up rapidly and forcing more short sellers to close their positions.
The second possibility is spot buying, meaning people are purchasing PEPE tokens with the intent to hold them. Strong spot demand can help sustain a coin's price for an extended period, while a short squeeze tends to fade once short sellers exit. Without data on open interest (the total value of outstanding futures contracts) or the funding rate (a recurring fee that shows trader positioning), it's unclear what truly fueled PEPE's surge.
PEPE Broke Above Its October High in Two Waves of Buying
At $0.00000507, PEPE now trades above $0.00000479, its intraday high on October 21, which has acted as a ceiling for the coin since October 10. In trading terms, this is called resistance. Once a coin breaks through a resistance level, that price often becomes support, where more buyers may return.
PEPE's climb consisted of two phases. It began on October 20, opening at $0.00000415 and closing at $0.00000455—a 9.6% gain on the highest trading volume in two weeks. It then pulled back slightly, dipping to $0.00000433 on October 22 before finishing the day at $0.00000438.
The second phase was the notable 13.4% jump that pushed it past the October 21 high, with substantial trading activity during a few busy hours on October 23. Over a longer time frame, the rally looks smaller. PEPE is up 61.5% over the last 90 days but down 36.6% from a year ago, and it continues to trade 81.9% below its December 9, 2024 peak of $ 0.00002803.
PEPE Rises While Dogecoin and Shiba Inu Slip
Unlike its peers, PEPE has rallied on its own. Between October 16 and October 23, Dogecoin(CRYPTO: DOGE) fell by 2.4%, and Shiba Inu(CRYPTO: SHIB) dropped 2.8%. These older dog-themed memecoins typically attract the same audience as PEPE, but this rally shows no sign of money rotating across memecoins.
The broader cryptocurrency market also showed signs of weakness. Total market value fell 2.4% over 24 hours, and trading volume sank 24.6%. This suggests that a small number of traders drove Pepe's price upward. The Crypto Fear and Greed Index, which tracks market sentiment, was neutral at 47, signaling neither fear nor greed.
The size of the cryptocurrency market explains much of the disparity. Bitcoin accounts for 59.5% of the total crypto market value, meaning it requires large sums to move its price. Traders are currently reacting to concerns about oil prices and inflation. In contrast, PEPE, valued at around $2.1 billion, can be swayed significantly by a smaller influx of buyers or a sudden wave of forced short-covering.
Because memecoins lack an underlying earnings model, attention and trader positioning drive their pricing, allowing PEPE to grow while its closest rivals falter.
Can the Pepe Price Rally Last Above $0.00000479?
A pullback appears more likely than a rapid rise to new highs. For the rally to continue, spot buyers need to keep showing up, but that support hasn't materialized yet. Furthermore, total trading volume across the crypto market fell 24.6% as PEPE surged, suggesting new money is largely absent. If the gains came mostly from short liquidations, the upward momentum may stall once those positions close.
Watch PEPE's breakout level of $0.00000479. If it closes below this mark, it may indicate the rally stalled and was primarily fueled by the short squeeze. If PEPE holds above it while Dogecoin and Shiba Inu turn higher, that could point to spot demand behind the 23.4% weekly gain.
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