Pepecoin (PEPE) is the token that keeps on giving, at least so far. The tokens have been running from strength to strength in the past week, even as skeptics warned of an impending collapse, gaining around 500% in the past two weeks according to CoinGecko data.
Those warnings centered around the apparent number of whales – or entities that hold large amounts of a token – buying PEPE in the hours after it was first issued in mid-April.
That has led to short interest flourishing among futures traders, as CoinDesk reported. Shorts refers to betting against a token̵[ads1]7;s price.
Funding rates in perpetual futures linked to the token remain negative, indicating the dominance of bearish positions in the derivatives market. A negative funding rate indicates that shorts are dominant and are willing to pay longs to keep the bearish bets open.
However, an 80% price increase in the last 24 hours has led to heavy losses for these traders. CoinGlass data shows that shorts against PEPE have lost at least $11 million on multiple exchanges in the past 24 hours – with traders losing $5.5 million on crypto exchange OKX alone, the highest figure among counterparties.
Traders lost another $2.2 million on Huobi, around $3.6 million on Bybit and a few hundred thousand dollars on BitMEX. All these exchanges started offering PEPE futures trading in the last week.
PEPE losses were third only to bitcoin (BTC) and ether (ETH) futures liquidations, which typically produce the highest futures losses.
Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It occurs when a trader is unable to meet the margin requirements for a leveraged position (does not have sufficient funds to keep the trade open).
Large liquidations can signal the local top or bottom of a steep price movement, which can allow traders to position accordingly.