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PEPE's 3.22% Gain Faces 11% Decline Risk Amid Bearish Indicators

Coin WorldSunday, Apr 20, 2025 1:16 am ET

1min read

PEPE, a memecoin, has been on a bullish trend since last week, with a cumulative gain of 3.22%. This upward movement is supported by spot traders who have accumulated $37 million worth of the asset in the past week. This accumulation is significant as the last major accumulation occurred on March 3, when $53 million worth of PEPE was moved to private wallets. Spot traders' activity could slow the memecoin’s decline as they continue accumulating during the dip.

However, despite the bullish trend, several technical indicators and derivative market metrics suggest that PEPE's rally might be losing steam. On the 4-hour chart, PEPE is trading within a bullish ascending triangle pattern, which typically indicates a potential breakout to the upside. However, each time PEPE approaches the resistance level, it produces prominent wicks rather than full-bodied candlesticks, suggesting strong selling pressure at the resistance level, which could trigger a pullback.

Additionally, the formation of a death cross, where the 20-day SMA slipped below the 200-day SMA, adds to the bearish sentiment. The Accumulation/Distribution (A/D) indicator also confirms this bearish trend, showing that the market has entered a distributive phase, where participants begin selling the asset, causing it to trend lower. Furthermore, the Funding Rate has turned negative at -0.0097, indicating that short sellers are in control, paying a periodic fee to maintain their positions.

Moreover, volume dynamics showed fatigue. While PEPE rose 1.49% in the last 24 hours, trading volume fell by 36.4%. This Price-Volume divergence typically suggests a weak rally with fading follow-through. Derivative traders could further contribute to PEPE’s decline, as the negative Funding Rate indicates that short sellers are dominant in the market.

In summary, while PEPE has formed a bullish structure that could trigger a rally, supported by spot traders, technical indicators and derivative market metrics suggest that an 11% decline could be likely. The bearish sentiment is further supported by the death cross formation, the negative Funding Rate, and the Price-Volume divergence. However, spot traders' accumulation of $37 million worth of PEPE in the past week could slow the memecoin’s decline as they continue accumulating during the dip.

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