Pepe's Range-Bound Struggle: Why Weak Momentum Metrics Suggest Caution for Investors

The Pepe (PEPE) token has surged 16% in recent days, driven by whale purchases and a 45% spike in on-chain activity. While this volatility has positioned PEPE as a standout meme coin—outpacing gains in Dogecoin (DOGE) and Shiba Inu (SHIB)—technical and behavioral signals suggest caution for investors. Despite bullish momentum metrics, overbought conditions and profit-taking by large holders hint at a potential correction.

Technical Analysis: Overbought RSI and Diverging MACD

According to a report by CoinPedia, PEPE's Relative Strength Index (RSI) has approached overbought levels above 70, a classic warning sign of short-term exhaustion. Historically, such levels often precede pullbacks as traders lock in profits. Meanwhile, the Moving Average Convergence Divergence (MACD) shows narrowing bullish momentum, with the histogram shrinking despite the 50-day and 200-day moving averages forming a bullish crossover. This divergence suggests that while the trend remains upward, the pace of buying is slowing—a red flag for aggressive longs.

Trading volume has surged by 189% to $1.62 billion, reflecting heightened enthusiasm. However, volume spikes often precede distribution phases, where large holders offload positions. This dynamic is evident in PEPE's case, where whales moved 11.75 trillion tokens ($160 million) in a single day, reducing their exposure amid rising prices.

Behavioral Market Dynamics: Whale Activity and Investor Sentiment

The recent price surge—28% over seven days—has been fueled by speculative buying, particularly from retail investors chasing momentum. Yet, on-chain data reveals a critical imbalance: large holders are actively profiting. As stated by CoinMarketCap, the 45% jump in on-chain activity is largely attributable to whale outflowsWhy is Pepe Coin (PEPE) Price Surging Today?^[2], which reduce the available supply but also signal a shift from accumulation to distribution.

This behavioral shift aligns with broader market dynamics. The broader altcoin rally, driven by capital rotation from Bitcoin, has inflated risk-on sentiment. However, meme coins like PEPE are inherently volatile, and their price action often reflects herd behavior rather than fundamental value. The current surge, while impressive, may be a textbook example of a “meme coin bubble” forming—where social media hype and whale manipulation drive short-term gains but lack sustainable demand.

Why Caution is Warranted

While PEPE's technicals remain bullish in the short term, the combination of overbought RSI, narrowing MACD, and whale profit-taking creates a high-risk environment. Investors should monitor key support levels and watch for a breakdown below the 50-day moving average, which could trigger a deeper correction. Additionally, the lack of historical volatility data makes it difficult to assess whether current price swings are abnormal or part of a new baseline.

Conclusion

PEPE's recent performance underscores the allure of meme coins in an altcoin-driven market. However, weak momentum metrics and on-chain distribution patterns suggest that the token is nearing a critical inflection point. Investors should approach with caution, treating further gains as opportunities to secure profits rather than chase momentum. As the market digests these signals, PEPE's ability to hold key support levels will be a decisive factor in determining its next move.