Memecoins—cryptocurrencies such as
Dogecoin
and
Shiba Inu
that are based, largely, on internet jokes—have long represented some of the frothiest corners of the digital asset market. And there’s a hot new name on the block.
It’s Pepe, a token that references the Pepe the Frog meme—which has a checkered cultural reputation. The Anti-Defamation League (ADL) has named the Pepe the Frog meme a hate symbol, while noting that the character did not initially have racist connotations and that many uses of the meme continue to be non-bigoted.
Launched last month, Pepe has taken the market for smaller cryptocurrencies by storm, especially on the back of its listing on the crypto exchange OKX—the world’s sixth-largest by volume—on Monday.
Pepe recorded some $20 million of volume on OKX in its first hour of trading, according to analysis by a team led by Clara Medalie, the head of research at crypto data provider Kaiko. Pepe’s market cap briefly topped $500 million—still 25 times smaller than that of Dogecoin, the biggest memecoin—with volumes also surging on the decentralized exchange Uniswap.
While its market value remains far behind that of Dogecoin and Shiba Inu, the frog token is closing in on these two dog-themed coins quickly, especially as it looks like early traders may be taking profit amid the boom.
Pepe has had trading volumes near $213 million over the past 24 hours, according to data provider CoinGecko, compared with $268 million for Dogecoin and just $102 million for Shiba Inu. Meanwhile, Pepe prices have sunk 15% over the past day, though they remain up 150% since April 30, before the coin was listed on OKX.
“Pepe has captured the imagination of ‘degens,’ those crypto degenerates who love high high-risk, speculative crypto bets,” Antoni Trenchev, co-founder and managing partner at crypto lender Nexo, wrote in a note last month, shortly after Pepe’s launch. “Pepe is a reminder that vast riches can be accrued at breakneck speed in crypto, but what the crypto market giveth can—and likely will—be taken away in a blink of an eye.”
For mainstream investors, Pepe’s rise may be little more than further evidence of cryptos’ lack of seriousness—that, despite convictions of
Bitcoin’s
potential as a decentralized currency, crypto continues to attract traders more focused on memes than meaning.
But there may be a bigger takeaway: That the surge in Pepe represents the most extreme expression of improving risk-on sentiment among investors.
Cryptos have led risk assets higher this year, with Bitcoin soaring some 70% amid expectations that the Federal Reserve will soon pivot from tough monetary policy, helping digital assets outperform the
Dow Jones Industrial Average
and
S&P 500.
Pepe may be another sign of this shift in the crypto market, where traders are hoping for an end to the bear market and “crypto winter” that has gripped digital assets for more than a year. It could also be a warning that a new bubble is forming.
“When memecoins pump, it often tells us where we are in the crypto cycle. The one-week 230,000% gains witnessed by Squid [a token referencing the popular Squid Game show] in the Winter of 2021 was a huge warning sign the crypto market was reaching its peak,” Trenchev said. “Time will tell if the emergence of Pepe the Frog heralds the beginning of a new crypto summer or something a lot bleaker.”
Write to Jack Denton at [email protected]
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