Pepe Coin Drops Below Key Support Level, Anticipating Further Decline
The price of Pepe Coin has fallen beneath a critical support level, prompting fears of a more significant decline as the derivatives market indicates a bearish funding rate.
Overview
- Pepe price has displayed a death cross pattern on the daily chart.
- The weighted funding rate has entered negative territory.
- Technical indicators hint at the potential for a larger drop.
Pepe Coin Price at Risk as Funding Rate Turns Negative
Pepe (PEPE), the second-largest meme coin on Ethereum (ETH), was priced at $0.0000100095 on Saturday, August 30, reflecting a 33% decrease from its peak in June.
Data from CoinGlass highlights the risks facing Pepe as liquidations rise, the weighted funding rate becomes negative, and open interest decreases.
Recently, Pepe’s funding rate has fallen and has turned negative, reaching a low of minus 0.011%, the lowest level since August 24.
The funding rate represents the fee that traders in the futures market pay to align prices with the spot market. A negative funding rate suggests that traders expect future prices to dip below current levels.
Pepe’s futures open interest has been on a downward trajectory. After peaking at over $1 billion in July, it has decreased to $548 million, marking the lowest level since June. The drop in open interest and spot market volume suggests a decline in demand.
This bearish trend has coincided with a rise in liquidations, as exchanges close out leveraged trades. These liquidations heighten selling pressure, further suppressing price levels.
According to data from Nansen, institutional and whale investors have halted purchases. Over the last 30 days, smart money holdings have plummeted by 23%, while whale holdings have remained unchanged.
Technical Analysis of Pepe Price
The daily chart indicates that Pepe’s price has been trapped within a tight range in recent days. It has fallen below significant support at $0.0000098, negating the previously developing double-bottom pattern.
Moreover, Pepe has dipped below the lower boundary of the symmetrical triangle pattern and has created a death cross pattern, where the 50-day and 200-day moving averages intersect.
As a result, the token is likely to persist in its downward trend, with sellers potentially aiming for the critical support level at $0.0000082, which marks its lowest point since July 22.