Is Bitcoin overheating? The answer lies in PEPE

By Tom Mitchelhill, Cointelegraph; Compiled: Pine Snow, Golden Finance

In an October 27 post on X (formerly Twitter), Ran Neuner, co-founder of Onchain Capital and host of Crypto Banter, said: “If you want to know when the callback is coming, just follow PEPE. It’s actually an index when the market overheats,” Neuner said.

"When people are confident enough to enter the market and the market goes up, that’s a sign that you’re exiting. This strategy works every time. "

PEPE has recently gained more than 100%, from $0.00000064 on October 20 to a peak of 0.00000134 on October 27. Around the same time that Pepe peaked, Bitcoin had begun to slide from its just-reached one-year high.

Neuner’s theory has been embraced by other cryptocurrency traders in the past. On September 23, trader Alex RTB told his 60,000 followers that he had started using Pepe as a reliable indicator of the upcoming short-term decline.

However, there are also quite a few skeptics about the theory, and the data does not always support it.

Reetika, a trader in Dubai, noted that Pepe’s recent rally has been driven by positive news about the team change and the fact that it will burn more tokens, which is not necessarily a sign of general overconfidence in the market.

TradingView’s comparative data shows that the price of Pepe is often closely correlated with the price of Bitcoin, which can make it challenging to use memecoin as an indicator.

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Comparison of the price movements of PEPE and BTC since the launch of Pepe. Source: TradingView

In the meantime, Reetika recommends keeping an eye on Solana.

"SOL has been a good leading indicator right now. In the whole market, it broke through the resistance level at least one day earlier than BTC/ETH. I’ve been using it to estimate upside. "

However, Reetika clarified that SOL is not a perfect indicator either, but has performed well in recent markets.

Similarly, Poordart, a market commentator and avid cryptocurrency social media user, said that Pepe may not be the best indicator of the future price movement of major cryptocurrencies such as Bitcoin.

In Poordarts’ view, Pepe is still too new in the market to have enough “truly lasting value” as a reliable indicator to accurately measure Bitcoin’s price movements.