Profitable short-selling opportunity emerges as this cryptocurrency records significant funding rates.
The frenzy surrounding meme coins has returned to the cryptocurrency market, with cryptocurrencies like PEPE showing signs of being overvalued. This could indicate an opportunity for short-selling, as evidenced by increased 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 benefited short-sellers. If history repeats itself, this asset class could be in danger of another blow, despite the positive social activity from influencers.
As of now, PEPE has $644.85 million in open interest, making it the fifth-ranked coin on CoinGlass. This value represents 10% of the meme coin’s $5.98 billion market cap, with a trading price of $0.0000142. Despite a 20.34% drop in the 24-hour volume of $1.55 billion, the open interest in the meme coin has decreased by 6.37%.
PEPE’s funding rates suggest an imbalance weighted towards long positions, as long-position traders are currently paying an APR of 42.57% to short-sellers to correct this derivatives imbalance. This high funding rate presents an opportunity to open shorts against PEPE and profit from the current imbalance. However, short-selling PEPE carries risks, as the market landscape can change quickly.
Cryptocurrency traders have already begun taking advantage of this short-selling opportunity, as seen on the liquidations heatmap. However, as more traders place their bets, there is a possibility of a short squeeze, which could punish bearish speculators.
PEPE’s price action has already resulted in the liquidation of long positions through a long squeeze to its current levels. The future movement of the meme coin will depend on the capital volume that enters for short or long positions in the coming days. Traders and speculators in the cryptocurrency market must be aware of the volatile nature of these digital assets and proceed with caution.
Disclaimer: The content on this site should not be considered investment advice. Investing in cryptocurrencies carries risks, and your capital is at risk.
