Pepe investors caught in high-stakes game of musical chairs.
A recent study by SingularityDAO revealed that the majority of investors in Pepecoin (PEPE) were left with fewer gains as early investors took the bulk of profits. The report stated that early profit-taking had drained the token of considerable liquidity, leaving most investors unable to make substantial profits. Over 80% of potential profits were made in the first week of Pepecoin’s issuance, during which the ‘Pepe the Frog’ themed meme coins went from a market capitalization of low five figures to $33 million in just over a week. Since then, the tokens have reached a peak market capitalization of $1.8 billion in mid-May, surpassing the trading volumes of other leading meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB). However, analysts have raised concerns about the early activity of Pepecoin traders and the absence of retail traders, which has resulted in too many tokens in too few hands, leaving the price action dependent on a few investors. As a result, PEPE prices have fallen by 73% since their May peak, and liquidity remains a persistent concern. SingularityDAO also discovered that a small number of large-scale investors known as “whales” hold up to approximately 25% of PEPE, while other large investors hold up 46% of the currently circulating supply. This means that a minority of investors hold a high degree of influence over the coin’s price, creating a risky investing environment for hopeful traders who have already missed the opportunity to gain huge profits before even investing in the coin. According to Rafe Tariq, Senior Quant at SingularityDAO, the limited amount of net liquidity is creating a high-stakes game of musical chairs, where everyday investors are being lured in with the hopes of big profits, but only a small percentage of investors will walk away with a profit, while everyone else will get burnt. In conclusion, what appeared to be an exciting opportunity to make a quick buck on the surface was nothing more than false hope for the average individual, according to Tariq. This article was edited by Parikshit Mishra.