Is Pepe Coin Still a Good Buy After Its 50% Price Crash?

The price of Pepe (PEPE), the third-largest memecoin by market valuation, has declined by over 50% from its record high of around $0.00001725, established in May 2024. As of Aug. 12, it was trading for as much as $0.00000850, up 45.30% from its local low.

PEPE’s remarkable rebound, however, accompanies a decline in trading volumes, indicating a lack of conviction among traders about a sustained uptrend in the coming days. Atop that, its recovery is mirroring the crypto market moves, which, in turn, is responding to a flurry of technical and macroeconomic signals in August.

Are these fundamentals and technical indicators any bullish for PEPE markets in the long run? Let’s discuss.

PEPE Eyes 300% Rally Setup If Certain Conditions Are Met

PEPE has recently broken out of its ascending channel pattern to the downside, and its 45% recovery is all about reclaiming the channel’s lower trendline as support.

But approaching the trendline means decisively closing above the 50-day (red) and 200-day (blue) exponential moving averages (EMA), aligning with $0.00001013 and $0.00000843 levels, respectively.

Fortunately, PEPE’s recent price rebound accompanies a rise in its daily relative strength index (RSI) from the latter’s oversold zone below 30. As of Aug. 12, the RSI was around 41.60—a neutral zone—meaning there’s room for more upside momentum, at least until the reading hits the overbought threshold of 70.

Therefore, successfully reclaiming the channel’s lower trendline as support will likely enable PEPE to set eyes on the upper trendline at around $0.00003405 by the end of Q3 2024 or sometime during Q4. In other words, a 300% rally from the current price levels.

On the other hand, PEPE’s inability to reclaim the ascending channel’s lower trendline could result in a bearish continuation setup, as shown in the four-hour chart below.

Notably, the PEPE price is forming an ascending triangle pattern in a downtrend, a setup that typically results in the price breaking below the lower trendline and falling by as much as the triangle’s maximum height.

Depending on the breakdown point, PEPE can decline by 15-25% in the coming weeks to reach levels between $0.00000699 and $0.00000623.

PEPE Whales Are Selling

Pepe’s richest investors, also known as “whales,” appear to have been selling their holdings during its recent correction phase.

Notably, the PEPE supply held by entities holding over 1 billion tokens (grey) has declined slightly since July 24, when the memecoin topped out. Meanwhile, the 100 million—1 billion balance cohort (teal) has risen, indicating accumulation or a mere absorption from the 1 billion—infinity group.

If the supply is moving from large holders to smaller holders, it could reduce selling pressure in the short term, as smaller holders may be less likely to dump large amounts of tokens quickly.

Therefore, the absorption of tokens by the smaller cohort may lead to a more distributed ownership structure, which could stabilize price movements as the influence of any single large holder diminishes.

Is PEPE Still a Good Buy?

PEPE’s trends will likely mirror the broader crypto market moves ahead of the U.S. consumer price index (CPI) report on Aug. 14. A softer inflation data may enable the Federal Reserve to cut interest rates following their next meeting in September. CPI data anticipates a 100% probability of a 25-50 basis point rate cut.

However, persistent inflation means consumer prices will be far above their 2% target, delaying rate cuts. The prospects of flat interest rates could invalidate PEPE’s bullish setups discussed above.