PEPE Memecoin: Can Strong Exchange Outflows Boost Its Price Despite Ethereum Correlation?

• Recent data highlight how the memecoin Pepe’s [PEPE] close alignment with Ethereum [ETH] might hinder its growth trajectory.
• Substantial outflows from exchanges could potentially be beneficial for PEPE.
• Over the past day, Frog-themed memecoin PEPE showed remarkable resilience, being one of the few top-50 digital currencies to experience gains. Currently, PEPE is trading at $0.000011, marking a 3.35% increase from its previous day’s value.

Explore the latest developments in the memecoin sector, focusing on PEPE’s market dynamics and its correlation with Ethereum.

Pepe’s Correlation with Ethereum

Recent analytics reveal that PEPE has a significant correlation with Ethereum [ETH], with a correlation coefficient standing at 0.91. This figure starkly contrasts with the correlation PEPE shares with Bitcoin [BTC], which is relatively lower at 0.60. The correlation range is between -1 and +1, where -1 indicates an inverse relationship, and +1 signifies parallel movement in prices.

Implications of High Correlation

Given its high correlation with ETH, PEPE’s market performance may be heavily influenced by Ethereum’s price movements. As ETH has been trading sideways, with its price lingering at $3,502, a downturn or continued stagnation in ETH could similarly affect PEPE. Notably, recent market behaviors showed that ETH’s stagnant movements didn’t bolster optimism for PEPE.

Moreover, PEPE’s exchange inflows, which were recorded at 845,000 tokens, might suggest potential selling pressure. High exchange inflows typically signal increased selling activity, which can lead to price declines. Conversely, PEPE’s outflows, a critical metric indicating tokens being moved out of exchanges, were significantly higher at 131.07 million, according to Santiment data.

Current Market Sentiments and Holding Patterns

Memecoins, including PEPE, find themselves in a precarious position. The substantial exchange outflows indicate that many investors are opting to hold their tokens in non-custodial wallets, suggesting a long-term bullish sentiment. However, the retail participation, primarily smaller investors holding between $1,000 to $10 million worth of PEPE, has seen a decline.

Potential Market Movements

If the current trend of high outflows continues, PEPE may defy its strong correlation with Ethereum and see an uptick in its price. Should PEPE manage to break past its dependence on Ethereum’s market behavior, analysts speculate the token could reach $0.000013 in the near term. However, caution is advised due to market volatility and recent sell-offs.

Conclusion

In summary, while PEPE has shown promising growth, its future largely depends on its ability to decouple from Ethereum’s price movements. High outflows from exchanges and retention in non-custodial wallets indicate a potential bullish outlook. Nevertheless, a close watch on ETH’s market trends and broader market sentiments is crucial for PEPE investors to navigate potential risks and capitalize on opportunities.