Could Bitcoin (BTC) be heading for an imminent pullback? Some crypto market observers believe the answer could lie within the price action of a frog-themed memecoin.
In an October 27 post on X (formerly Twitter), Onchain Capital co-founder and Crypto Banter host Ran Neuner suggested that memecoin Pepe (PEPE) is a strong indicator of an overheated crypto market. Neuner stated, “If you want to know when a pullback is coming, just watch PEPE. It’s literally an index for when the market is getting overheated. When people are confident enough to go there and it pumps, that’s your sign to exit. Works every time.”
Pepe recently witnessed a more than 100% gain, growing from $0.00000064 on October 20 to a peak of $0.00000134 on October 27. Coincidentally, Bitcoin had already started sliding downward from its recently attained yearly high around the same time Pepe reached its peak.
Other crypto traders have also expressed a similar theory. On September 23, trader Alex RTB stated that he had begun using Pepe as a reliable metric for impending short-term declines. He tweeted, “This PEPE pump is another indicator of an upcoming BTC dump. Pumping coins like PEPE, DOGE, XRP, IMX, LINK always indicates the bloodbath, let’s see how it goes this time.”
However, there are skeptics who claim that the data doesn’t always support this theory. Dubai-based trader Reetika argued that Pepe’s recent uptick was largely driven by bullish news regarding changes in the team and the fact that they would be burning additional tokens. She believed it wasn’t necessarily a sign of broader overconfidence in the market.
Comparative data from TradingView shows that the price of Pepe is often tightly correlated with that of Bitcoin, making it challenging to use the memecoin as a reliable indicator. Reetika suggested looking at Solana’s SOL as a potentially more reliable predictor. She stated, “SOL has been a very good leading indicator for the moves so far. It has broken out of resistances at least a day before BTC/ETH over this entire move. I’ve been using it actionably for estimating upside.”
Market commentator and crypto enthusiast Poordart also expressed doubts about Pepe’s usefulness as a metric for gauging the future price action of major cryptocurrencies like Bitcoin. He believed Pepe is still too new to the market and lacks the necessary track record to be a reliable metric.
In conclusion, while some crypto market observers believe that Pepe can be a strong indicator of an overheated market and impending pullback, there are skeptics who question its reliability. Comparative data and alternative metrics may need to be considered to assess the future price action of cryptocurrencies like Bitcoin.
