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Meme coins hit records as bitcoin kicks off the week in the red

Published 2024-05-27, 08:12 a/m
© Reuters -- Bitcoin briefly climbed above the $69,000 threshold before quickly pulling back as traders started looking elsewhere for higher returns in fringe tokens known as memecoins. 

Two tokens within the Ethereum ecosystem, PEPE and MOG, soared to record highs on Monday, continuing the impressive rallies from last week.  These gains also coincided with a nearly 5% rise in ether. The surge followed the U.S. approval of key ether exchange-traded fund filings, prompting traders to consider meme tokens as beta bets.

The rise is part of a broader meme coin rally, with most meme-based cryptocurrencies trading in the green. The sector saw a surge in interest over the last few weeks after legendary trader and investor Roaring Kitty returned to the trading world following a three-year absence.

Moreover, the number of addresses holding meme coins for less than thirty days reached a record high last month, which indicates a massive influx of new traders entering the market.

Traders have been considering PEPE and MOG as leveraged ways to gain exposure to ether. The rally in these tokens began when analysts increased the probability of ether ETFs being approved for trading in the U.S.

In the past 24 hours, frog-themed PEPE and cat-themed MOG gained 11% and 45%, respectively, as the beta bet narrative gained traction. A beta bet allows investors to gain exposure to a main asset by investing in related networks or protocols. Trading volumes for PEPE across spot and futures markets reached over $1.8 billion, well above the usual $400 million to $600 million range.

Futures data revealed a massive increase in open interest for instruments tracking PEPE and MOG in the past 24 hours. PEPE's open interest climbed to $720 million from last week’s $550 million, and MOG's rose to $8.3 million from $5 million. An increase in open interest is typically seen as an indicator of new capital entering the market, potentially leading to more price volatility.

Despite the bullish sentiment, the long-to-short ratio for PEPE is tilted towards bears at 54%, indicating that traders are largely betting against further price increases.

PEPE even entered the top 20 largest tokens by market capitalization, surpassing $6 billion, and provided early investors decent returns from initial investments as low as $460. Since 2023, meme tokens—typically perceived as having no intrinsic value but enjoying sizable followings —have risen in prominence as beta bets on their respective ecosystems. 


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