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Meme coins have gained popularity as a means of participating in blockchain growth, especially among retail investors who find them more accessible and easier to understand.
In the past 24 hours, Pepecoin (PEPE) has experienced a surge of up to 60%, extending its weekly gains to an impressive 370%. This surge is part of a larger rally in meme coins, influenced by the recent success of dogecoin (DOGE) and bonk (BONK). CoinGecko data reveals that trading volumes for these frog-themed tokens have reached an all-time high of $3.6 billion. The risk-on environment has likely encouraged investors to make outsized bets on riskier assets like altcoins and meme coins.
Pepecoin has seen significantly higher gains compared to other meme tokens like shiba inu (SHIB) and dogecoin, despite the introduction of ecosystem upgrades by some of these tokens. Over the past week, DOGE has gained 170% while SHIB has gained 200%. In contrast, the broader CoinDesk 20 index (CD20) has experienced a more modest gain of 14%.
The rise of meme coins gained attention in late February when bitcoin, ether, and Solana’s SOL witnessed significant surges. These non-serious tokens are seen as a way for investors to speculate on the growth of a blockchain, particularly because they are considered more approachable for new investors.
Interestingly, futures products associated with PEPE have experienced large liquidations since Friday, suggesting that short covering—traders exiting bearish bets on the meme coin—may be amplifying the gains. Nick Ruck, COO of ContentFi Labs, noted that traders and investors are turning to meme coins for quick returns as major tokens and coins take a breather from their recent price surges.
The futures contracts linked to PEPE have witnessed over $50 million in liquidations, potentially contributing to the price spike as short positions are settled. Data shows that in the past 24 hours, only bitcoin, ether, and dogecoin futures have seen higher liquidation volumes.
Consequently, funding rates for perpetual futures tied to PEPE remain negative, indicating a prevalence of bearish positions in the derivatives market. Negative funding rates suggest that short positions dominate and traders are willing to pay longs to maintain their bearish bets.
