Profitable short-selling opportunity available as this cryptocurrency records significant funding rates.
The frenzy surrounding meme coins has returned to the cryptocurrency market, and it appears that cryptocurrencies like PEPE may be overvalued. This could indicate an opportunity for short-selling, as evidenced by the increase in open interest and high funding rates.
In the past, the rise of meme coins marked a peak in the market, followed by a crash that rewarded those who had shorted these cryptocurrencies. If a similar pattern emerges, this asset class could be at risk of another downturn, despite the positive social activity generated by influencers.
As of now, PEPE has $644.85 million in open interest, making it the fifth-ranked coin on CoinGlass. This represents 10% of the coin’s $5.98 billion market cap, with a trading price of $0.0000142. Although the coin has experienced a 20.34% drop in its 24-hour volume of $1.55 billion, the open interest in the market has decreased by 6.37%.
The funding rates for PEPE on consolidated exchanges show that there is a weighted interest in long positions. Currently, traders holding long positions are paying short-sellers an APR of 42.57% to address the imbalances in derivatives. This high funding rate presents an opportunity for short-selling PEPE and profiting from the current imbalance. However, it is important to note that short-selling PEPE is a bet against the market and carries risks, as the landscape can quickly change.
Some cryptocurrency traders have already started taking advantage of this short-selling opportunity, as seen on the liquidations heatmap. However, if these bearish speculators accumulate enough liquidity, it could trigger a short squeeze, resulting in losses for them.
PEPE’s recent price action has already caused the liquidation of long positions, leading to the current levels. The direction in which the meme coin moves will depend on the capital volume that enters the market for short or long positions in the coming days. Therefore, cryptocurrency traders and speculators should be aware of the volatile nature of these digital assets and proceed with caution.
Disclaimer: The content on this site is not investment advice and should not be considered as such. Investing in cryptocurrencies carries risks, and you should be aware that your capital is at risk.