Key highlights
- PEPE, a meme-inspired altcoin with no actual value, has gained significant popularity in the crypto market and has made early investors millionaires, but its lack of liquidity makes it difficult to sell.
- Bitcoin and other altcoins suffered a sell-off due to an abnormally large sell order on Binance and higher-than-anticipated U.K. inflation numbers, leading to market uncertainty and a drop in prices.
- Despite the recent market sell-off, Bitcoin has had a good year, with a significant number of BTC generating profits, indicating a strong cost basis foundation for the cryptocurrency below $30k.
The newest kid in the crypto market is PEPE, an altcoin made specifically for the meme with no actual value, as attracted a significant of crypto investors lately.
The crypto asset only recently began to gather popularity, when its market valuation was below one million dollars. With a market cap of approximately $140 million, it is already listed on several significant exchanges and is the 250th largest cryptocurrency, effectively printing money for those who invested early. In three days, the coin has increased by 1000%.
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While PEPE’s growth has made some early investors millionaires, it is not a liquid token and is therefore difficult to sell.
Lack of buyers is simply one problem with low liquidity coins; another is that liquidity is frequently concentrated in automated market maker pools.
Consequently, Bitcoin dropped more than 3% in just 15 minutes, pushing the largest crypto asset by market valuation below $29K. According to Binance data, further losses brought it to a low of $28,500
Although there didn’t seem to be a fundamental cause for the sell-off right away, the market mood may have been affected by an abnormally big sell order on the cryptocurrency exchange Binance and an unexpectedly high U.K. March inflation number of more than 10%.
The United Kingdom’s inflation reading was higher than anticipated, thus adding more pressure on risky assets like Bitcoin. However, the severity of the response has been much, much worse on altcoins.
In a wider crypto market sell-off on Wednesday, Ethereum fell as much as 7% as traders tried to make their way through a hazy situation.
Early this morning, Bitcoin decreased by over 3% in a short period of time, according to Messari. Solana and Polygon, two altcoins, are down 8% and 5%, respectively, while other cryptocurrencies are also suffering.
Although the precise cause of the price decline is unknown, markets have been alerted to any indications of central bank tightening.
The Federal Reserve has been steadily raising rates for more than a year to combat decades-high inflation, and it is widely anticipated that it will do so again next month by increasing them by another 25 basis points.
However, it’s been a good run for Bitcoin this year. In the aftermath of yet another U.S. banking crisis, Bitcoin and gold prices have recently been connected, according to Glassnode. The company also looked into the idea of a full bull market coming back.
It stated that a significant number of BTC had just generated a profit. A total of 6.2 million BTC, or about a third of the supply, were profitable in 2023. This provides an “indication of just how large this cost basis foundation is below $30k,” the statement continued.
