- Pepecoin reached a market cap of $1.8 billion just over three weeks since issuance in mid-April.
- Binance’s decision to list Pepecoin on its “innovation zone” platform might have contributed to its price surge
- Pepecoin is having an impact on the Ethereum network owing to its immense gas consumption
Meme coins, or cryptocurrencies based on internet memes, have become increasingly popular in recent months. These coins, which are often created as a joke or parody, have seen massive price increases, with some coins rising by thousands or even millions of per cent in just a few weeks.
One such coin is Pepecoin (PEPE), which has seen an almost 5,000,000% rise in the past few weeks. The coin reached a market capitalization of $1.8 billion just over three weeks after its issuance in mid-April. However, the price of PEPE has since dropped by nearly 45%, likely due to traders taking profits on their positions or utilizing advanced trading strategies.
Despite the recent price drop, some traders have made incredible profits from investing in Pepecoin. For example, a pseudonymous trader spent just $263 to buy trillions of PEPE tokens three weeks ago and sold a part of their holdings for over $3.8 million in profits. The trader continues to hold more than $55 million worth of the tokens as of Monday.
Pepe’s recent surge can be partly attributed to Binance’s decision to list both Pepecoin and Floki Inu (FLOKI) on its “innovation zone” platform. This move by the world’s largest exchange signalled a ‘level of mainstream acceptance for Pepe coin and likely contributed to its increased popularity among traders.
However, analysts have repeatedly raised concerns about the behaviour of investors who buy relatively large amounts of meme coins like Pepecoin after their issuance on the Ethereum blockchain. This opens the risk of too much of the coin being held by too few people, which could potentially harm the short-term future of the coin.
In addition to these concerns, meme coins like Pepecoin are also having an impact on the Ethereum network. As per blockchain analytics firm DuneAnalytics, 413,283 PEPE Uniswap transactions were analyzed, revealing immense gas consumption. This is mainly owing to the increased usage of the Ethereum network, coupled with the growing transaction fees. Despite recent changes to the fee structure on Ethereum, the network is still struggling to scale effectively.
As a result, the excessive gas consumption of meme coins like Pepecoin has the potential to strain the network, leading to slower transaction times and increased fees for other users. Additionally, many analysts are of the opinion that the presence of such a volatile and speculative token on the Ethereum network could harm the market’s image, as many may view it as a sign of market immaturity or instability.
However, it’s important to note that meme coins like Pepecoin also bring some benefits to the market. As transaction fees continue to increase due to the token’s popularity, the revenue generated by validators also increases. This additional income could encourage more validators to join the network, thus improving its overall security and stability.
Overall, the recent surge in popularity of meme coins like Pepecoin highlights the speculative nature of the cryptocurrency market. While some traders have made incredible profits, others have lost money due to the volatility and risk associated with these coins. It remains to be seen whether meme coins will continue to rise in popularity or if their popularity will fade as quickly as it came.