Memecoin PEPE Pump Suggests a Bitcoin Pullback: Is It Reliable?
PEPE price pump could be a leading indicator to Bitcoin's detriment. But is this true?
Key Takeaways
- PEPE’s price surge followed Bitcoin’s with a delay.
- PEPE and BTC are strongly correlated.
- Chart analysis suggests further upside in the near future.
In the volatile world of cryptocurrencies, traders and enthusiasts often turn to unique metrics and indicators to predict market movements. While Bitcoin’s price behavior garners the most attention, smaller, niche tokens occasionally come into the spotlight as potential indicators of broader market sentiment.
One of these tokens, a frog-themed memecoin called PEPE, has recently stirred debate among crypto traders and analysts. But is PEPE really a harbinger of Bitcoin’s price action? Or is this just another twist in the unpredictable world of crypto?
Is PEPE A Bitcoin’s Indicator?
Recent price actions of the frog-themed memecoin, PEPE, have led some crypto market analysts to speculate on the health of Bitcoin. Onchain Capital co-founder and Crypto Banter host, Ran Neuner, mentioned on X that PEPE can be viewed as a barometer for the crypto market’s temperature.
Neuner commented: “When people are confident enough to go there and it pumps, that’s your sign to exit. Works every time.”
This observation followed PEPE’s surge of over 100% between October 20 and 27. At the same time, Bitcoin showed a decline from its recent yearly high.
Other traders, such as Alex RTB, highlighted the fact that this sentiment about PEPE is acting as a warning sign for Bitcoin. In September, Alex RTB told his 60,000 followers about his use of PEPE as an indicator of short-term market drops.
However, not everyone agrees. Some detractors, like Dubai-based trader Reetika, believe the recent PEPE price increase was more a result of internal bullish news about the meme coin itself and not an indicator of the broader market’s overconfidence.
Correlations And Diversities
Data from TradingView reveals that PEPE’s price often moves in tandem with Bitcoin, which would challenge its utility as a distinct leading indicator.
Looking at the comparison chart, we may see no major divergence between the price action of PEPE and BTC. Instead, there’s a strong correlation between these assets in terms of the trend direction.
There are some notable differences in momentum, however. For example, while Bitcoin managed to make a new yearly high, PEPE was still quite lower than its July high and very far off its all-time high this year.
In our last PEPE analysis, we anticipated this increase because a prolonged correction likely concluded on September 25.
With Bitcoin’s price establishing its first higher low on the same date, there’s stronger evidence of these two assets moving in sync, with PEPE serving as a leading indicator.
In fact, Bitcoin hit its last macro low earlier, on September 11, from which the recent uptrend began. Following the investor’s logic of gravitating toward riskier assets after Bitcoin surges, it seems that PEPE is more of a leading indicator for Bitcoin rather than the other way around.
The prices are getting overextended as the market reaches exuberance we should see a downturn soon, but there is still a bit more room for the upside, as discussed in our latest analysis on Bitcoin.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
