Pepe – Sustainable or Not
$PEPE, a token based on the "pepe the frog" meme, has skyrocketed in value by a staggering 2,100% since its launch last month, driving its market capitalization to over $1B. $PEPE has over 75,000 holders, with several wallets holding over $25M worth of the token.
Now, Binance and other top centralized exchanges have announced the listing of $PEPE, driving the price even higher.
But is this newly-born memecoin sustainable or not?
Let’s examine why $PEPE experienced such a massive pump first. The beloved internet meme, Pepe, seems to be the main driving force behind the popularity of $PEPE. The crypto community has been monetizing its popularity since 2016 when the meme was integrated on top of the Bitcoin blockchain as a series of NFTs.
However, the coin's market capitalization couldn't have reached $1B just by parasitizing a popular internet meme. The fact that the creator of $PEPE used Twitter to popularize the memecoin has been an important factor.
The creators of $PEPE chose an interesting tactic, putting their creation in opposition to the original dog-themed memecoins, rather than trying to copy their success. Also, the token is filled with other meme references, like the supply of 420.69T or the Twitter description, which made the new token even more attractive for crypto investors.
The token quickly gained a lot of followers, building a community that rivals $DOGE and $SHIB. The transaction volume driven by all those followers could have also contributed to the price push for the crypto token.
Word spread and more crypto investors started investing various sums of money into the coin in hopes of massive profits and remembering the good old $DOGE days when people with $100 could turn millions in profit.
At the same time, 93.1% of all $PEPE in circulation were sent to a liquidity pool in Uniswap, and liquidity provider tokens were burnt. The remainder is reserved for centralized exchange listings and other initiatives.
With the popularity of DEXs, this could have also been a driving factor for the price. The lack of liquidity could also be a driving price, as many $PEPE holders pay staggering fees to cash out, up to 30% on some DEXs.
But, will $PEPE maintain at least 50% of the price in the long run?
$PEPE has a market value of approximately $1B on CoinGecko, which is based on multiplying its total supply of 420.69T with its current price of around $0.00000122. In comparison, rival site CoinMarketCap has placed Pepe on page 27, with a ranking of 2,612. Other crypto projects with similar positions have market caps of just $100,000, a small fraction of Pepe's alleged value.
It is likely that CoinMarketCap ranked $PEPE lower due to difficulties in verifying its circulating supply, and the situation is still evolving as more information becomes available. But, the fact that the biggest data gainer of the crypto world doesn’t recognize $PEPE is a red flag.
Another concern is the purchase of 28.9T $PEPE, which accounts for 7% of the total supply, by a group of "mysterious whales" within minutes of trading on exchanges. These wallets acquired their $PEPE for an average cost of 0.61 ETH, which is now worth over $58.9M.
The worry is that the token's thin liquidity could cause its price to plummet if even a small portion of those tokens were sold. These wallets may belong to insider traders or the Pepe development team.
Three security risks associated with $PEPE have been identified so far. These risks include the potential for developers to suspend trading, limit transactions, and blacklist addresses from interacting with their tokens.
It's important to note that Pepe's own disclosure states that it is a meme coin with no intrinsic value or expectation of financial return and is completely useless, intended only for entertainment purposes.
What is certain right now is that the creator of $PEPE is a genius. DYOR before buying or selling any type of crypto, whether it's Bitcoin or Pepe…
