The Meme crypto coin Pepe had a meteoric rise, but lost 70% of its value in a week.

[ad_1]

Welcome to Distributed Ledger. Meet Frances Yue, crypto reporter at MarketWatch.

Three weeks after its launch, Pepe coin, a token referencing the Internet meme Pepe the Frog, saw its market capitalization hit $1.6 billion on May 5, although it has since fallen more than 60% to around $600 million. The token has lost more than 70% of its value from its all-time high on May 5.

Also Read: Why Meme Pieces Are Trending Again

Pepes’ rally reminded investors of the meme coin craze they witnessed in 2021, especially evidenced by the rise of dogecoin and Shiba Inu at the time. The surge in Pepes also inspired a buying spree for several other meme coins, which together contributed to Ethereum and Bitcoin network congestion.

More recently, crypto enthusiasts are monitoring the tension between the Pepe coin community and digital asset exchange Coinbase COIN, -3.66%, which in a newsletter on Wednesday said Pepe’s character the frog had been co-opted as a symbol of hate by alt-right groups, citing the Anti-Defamation League.

This has since sparked outrage among meme token supporters on Twitter. Pepe The Frog is many things, but it’s definitely not a symbol of alt-right hate, wrote Twitter user @farokh, a Pepe Coin supporter. Was the story taken away from Matt Furie [creator of the character] for a moment? Yes it was. Does this mean that the whole character is racist and condones hate speech and behavior? No, this is not the case.

On Thursday, Coinbase chief legal officer Paul Grewal tweeted an apology to the Pepe coin community, saying the exchanges newsletter did not provide a full picture of the meme’s history.

Find me on Twitter at @FrancesYue_ to share your thoughts on crypto, this newsletter, or your personal stories with digital assets.

The rise of Pepe’s play

Chase Devens, senior research analyst at Messari, attributed Pepes’ rise to a perfect storm of conditions.

I would say that in the last month or so, nothing really too remarkable has happened in the crypto realm, Devens said in a phone interview. So when the Pepe piece came out, it was relatively easy for people to be like, this is something interesting, and to start directing their attention to it.

It also helped the crypto rally that the Pepe the Frog meme was already popular on the internet, Devens noted.

Jeff Mei, COO at BTSE, said the rise of PepeCoin was largely driven by investors’ fear of missing out, which is often referred to as crypto slang called FOMO.

Support from so-called whales, or individuals or entities that hold large amounts of Pepe coins, also helped the rally, Mei said.

While the crypto market as a whole might be stuck in an extended winter, the viral dynamic is following its own logic, Mei said.

Bitcoin has gained over 60% so far this year, but is still down from its all-time high in 2021, according to data from CoinDesk.

And after

The price of Pepe coins peaked on May 5 at around $0.000004, after Binance announced it would list the token, but has since fallen more than 70% to around $0.000001 on Thursday.

It is relatively common for meme coin prices to skyrocket when listed on major exchanges, and then fall, Devens noted. For example, the price of Shiba Inus peaked in October 2021 at around $0.000018, after Coinbase listed the coin in September 2021, but then lost half of its value to around $0.0000086 on Thursday.

It’s hard to say what’s next for Pepe’s play, Devens noted. Compared to Dogecoin and Shiba Inu, which have a market capitalization of $9.8 billion and $5.1 billion, the Pepe coin is still relatively small.

Admittedly, cryptocurrencies, especially meme coins, are highly volatile and remain largely unregulated.

Congestion on Ethereum and Bitcoin

The rise of the Pepe coin, which is based on Ethereum, has also driven up gas fees, or fees paid to validators on the blockchain, as more transactions occur on the network.

The resurgence of Pepe-inspired meme coins has also led to more tokens being created on the Bitcoin network using the BRC-20 token standard, which allows users to create and send fungible tokens through the Ordinals protocol.

Since the launch of PEPE, BRC-20 meme coins have exploded in popularity and caused heavy congestion on the network, Devens wrote in a recent note.

Read: Binance suspends bitcoin withdrawals twice due to high volume

Crypto at a Glance

Bitcoin lost 6.3% last week and was trading below $27,000 on Thursday, according to data from CoinDesk. Ether was down 4.5% over the same period to hit below $1,800.

Biggest Winners Price 7 Day % Return Bitget Token $0.48 20.4% Kava $0.86 8.1% Bitcoin SV $33.72 2.2% LEO Token $3.60 1, 1% cUSDC $0.02 0.3% Source: CoinGecko 26.3% Conflux $0.25 -23.9% Injective $5.70 -23.7% Frax Share $5.95 -22.3% Source : CoinGecko

[ad_2]