Memecoins have become a popular phenomenon in the cryptocurrency space since the inception of Dogecoin back in 2013, with fortunes made and lost in equal measure. However, a new player in the market is causing a stir among investors. Pepe (PEPE) has been grabbing a chunk of the memecoin market share from plucky investors in recent weeks.
As previously reported by Cointelegraph, PEPE saw a 2,000% boom in value following its launch in late April 2023. The token’s rally is primarily attributed to zealous memecoin hype, with the project widely shared on Twitter over the past month.
Amid the excitement, it is important to note that the Pepe website itself is branded with a closing disclaimer, labelling PEPE as “a meme coin with no intrinsic value or expectation of financial return”. The project also stipulates that it has no formal team or roadmap and that the token is “completely useless and for entertainment purposes only”. With this in mind, investors should exercise caution before investing in the token.
Data analytics firm Nansen has provided insightful data and key takeaways following the rise of PEPE’s market capitalisation. According to research analyst Xin Yi, the total memecoin market value is around $20 billion, with the top five tokens, Dogecoin (DOGE), Shiba Inu (SHIB), PEPE, Baby Doge Coin (BABYDOGE) and Floki (FLOKI), accounting for over $18 billion of the value.
The giant spike in PEPE’s token value and market capitalisation has been seemingly unstoppable since its inception. Data provided by Nansen Query shows the massive surge in token value in relation to the other top five memecoins. However, Yi notes that the infographic does not paint a complete picture, given that the data for PEPE reflects its listing on CoinGecko, which came a couple of weeks after its inception.
Investor sentiment and action around memecoins are largely driven by social relevance and events like 4/20, which is known as DOGE day, according to Yi. Memecoins are known to have no intrinsic value, therefore, it is important to note that they rely on catalysts such as these. The social aspect of memecoins remains a considerable driver of investor sentiment and action, highlighting celebrities’ touts such as Elon Musk’s tweets, and rampant Twitter bots that drive memecoin hashtags to relevance.
Nansen provides data analytics and insights into “smart money” cryptocurrency traders and holders by labelling wallets and tracking trades. Yi noted that the rise of PEPE has attracted a significant number of smart money holders, as per on-chain data highlighted by Nansen. She added that a few thousand traders might benefit from the surge in the value of memecoins, which is a gamble given that many other memecoins are pump-and-dump or rug-pull schemes.
However, the inherent risk of memecoins often leads to liquidity crunches, where major tokenholders dump their holdings, leaving smaller investors reeling from losses. Therefore, investment in memecoins remains risky and should be approached with caution.
A number of cryptocurrency exchanges have listed PEPE in the wake of its launch and subsequent investor appeal. These include OKX, MEXC Global, Bitget, Gate.io, and Huobi. The rise of memecoins like PEPE has also led to concerns about a potential increase in gas fees on Ethereum. This is believed to be fuelled by memecoin frenzy with mixed comments on network usability.
In summary, memecoins have been around for some time, with their fair share of success stories and failures. So-called ‘meme’ coins like PEPE may attract investors with the hopes of striking it rich, but like all investments, investors must do their own research and understand the risks involved before taking the plunge.
