Pepe memecoin reaches a record high but faces a potential 40% crash by June

The current trend of PEPE closely resembles the price movement observed prior to a 40% crash in January.

Pepe (PEPE) saw an unprecedented surge in price on May 27, propelled by the recent endorsement of crucial Ether (ETH) exchange-traded fund (ETF) filings in the U.S. This development encouraged traders to perceive memecoins based on Ethereum as ventures offering significant potential returns, albeit with elevated risk levels.

After the approval of Ether ETF filings by the U.S. Securities and Exchange Commission (SEC) on May 20, PEPE experienced a remarkable surge of 7.60%, reaching an unprecedented high of $0.00001725. This surge represents an impressive 88% increase. Following suit, other Ethereum-standard memecoins like Dogecoin (DOGE), currently priced at $0.17, Shiba Inu (SHIB), priced at $0.000026, and Mog Coin (MOG), also witnessed substantial gains.

PEPE fractal hints at a 40% price correction in June

The Pepe market’s continuous surge may taper off in the upcoming weeks as there’s a noticeable gap emerging between its escalating prices and the declining daily relative strength index (RSI).

PEPE’s “bearish divergence” indicates that the strength of its upward momentum might not match the rising price action, potentially signaling a forthcoming price reversal. This scenario mirrors the 40% crash experienced by memecoins in January, where a conspicuous disparity emerged between their escalating prices and declining RSI trends.

Moreover, PEPE’s daily Relative Strength Index (RSI) has surpassed 70, signaling an overbought condition often preceding price corrections or consolidation. This heightens the potential for sell-offs in the PEPE market following its robust year-long performance.

If a correction occurs, PEPE’s price might decline towards its 50-day exponential moving average (50-day EMA), indicated by the red wave, at approximately $0.00000965 by June, representing a decrease of around 40% from its current levels. This mirrors the price correction observed before the bearish divergence signal in January.

Alternatively, if the uptrend persists, PEPE could potentially test its 2.618 Fibonacci retracement level around $0.00002203 in the upcoming weeks, marking an increase of roughly 32% from its current price levels.

Richest PEPE investors are dumping

The bearish technical outlook for PEPE is bolstered by the continued profit-taking actions of its most affluent investors. Particularly noteworthy is the reduction in PEPE supply held by entities owning over 1 billion tokens during market upswings. This suggests that these large stakeholders have been selling when prices reach local highs. As a result, there has been a rise in PEPE supply held by smaller investors.

Despite this, there have been instances where traders have pulled out millions of dollars’ worth of PEPE tokens from exchanges following the recent surge, indicating their desire to retain the memecoin rather than sell it at its present peak.

The consequences of these withdrawals on the total whale supply data remain uncertain, which increases the potential correction risks for PEPE in June.

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