PEPE surges 65% behind the scenes: When "smart money" starts betting on Meme, is it a bubble upgrade or a paradigm shift?

As leverage and consensus become the new narrative, the valuation logic of Meme coins is quietly being rewritten by institutions.
In the past week, the spotlight in the crypto market was stolen by a frog. PEPE surged 65% against the trend amid Bitcoin's pullback and Ethereum's weakness, with its on-chain open interest reaching a historic peak of 75 trillion tokens at one point. This is not retail frenzy—data shows a large influx of high-leverage positions into this token born from a frog meme.

The "Meme season" seems to be ringing again. On the BSC chain, a Meme coin called "I'm coming" broke through $20 million in market cap within 24 hours, with a daily increase of over 63%. Meme communities on Ethereum, Solana, Base, and other public chains are reactivating, with discussion heat rising sharply.

But this time, the story has a subtle difference. Leverage funds, technical analysis, institutional-level narratives—these traditional financial market terms are being skillfully applied to Meme coins once considered "pure gambling." Is this the start of a new experiment, or a prelude to an even more dangerous bubble?

1. Data Decoding: Who is Driving PEPE?
PEPE's rise is not untraceable. On-chain data shows its open interest peaked in early January, with a large number of high-leverage positions quietly laid out before the price started to move.
• "This isn't retail behavior," independent analyst Tom Wong pointed out, "75 trillion in open interest requires professional fund management and risk control capabilities; ordinary investors find it hard to do."
• This phenomenon is not new. Early 2024, when Dogecoin bottomed around $0.06, there was also a precursor of a 300% surge in open interest. Three months later, DOGE hit $0.22, up over 260%.
• PEPE's technical chart is also "perfect": price broke out of a multi-month descending wedge, with the key support at $0.0000040 tested 8 times. Volume expanded during rallies and contracted during pullbacks—classic signs of institutional accumulation.
• "Meme coins are becoming 'institutionalized'," said analyst at crypto hedge fund Pantera Capital in a recent report. "When hedge funds start trading Meme coins with derivatives, and technical analysis becomes effective on these tokens, we may need to redefine this asset class."

2. Ecosystem Evolution: From DOGE to PEPE, Three Generations of Meme
Meme coin development has gone through three distinct stages:
• First Generation: DOGE – born in 2013 as a joke, later propelled to phenomenon status by Elon Musk. Its core is "community faith" and "celebrity effect."
• Second Generation: SHIB – exploded in the 2021 bull market, attempting to shed the "pure Meme" label by building a "decentralized ecosystem" (ShibaSwap, Shibarium, etc.) towards "usefulness."
• Third Generation: PEPE – returning to Meme essence but adding mature financial tools and trading strategies. Leverage, futures, technical analysis are standard, with communities mastering financial play while maintaining Meme culture.
"SHIB tries to become serious, but PEPE tells us that admitting you're here to gamble is actually a form of sincerity," said CryptoKale, a well-known Meme coin researcher. "The new generation of traders no longer needs a 'use case' cover—they directly play with liquidity, volatility, and sentiment."
This shift is especially evident at the public chain level. Ethereum, Solana, BNB Chain, Base, and others have their own top Meme coins. Meme ecosystems across chains resemble an arms race, becoming key indicators of chain activity and community cohesion.

3. Risk Structure: The Leverage Tower of Babel
• Behind PEPE's frenzy, risks are also accumulating. Data shows about 60% of its open interest is over 20x leverage. This structure is like a castle built on quicksand—huge gains during rallies, but once the trend reverses, chain liquidations could cause a free fall.
• "The current social media sentiment index has reached 94 (out of 100), close to the peak level of Dogecoin in May 2021," warned Joe Vezzani, CEO of data platform LunarCrush. "Historically, when Meme coin sentiment hits such extremes, it often signals a short-term top."
• External risks cannot be ignored. The upcoming January FOMC meeting, uncertainties around Trump administration's crypto policies, and macro black swan events could burst the Meme bubble.
• More fundamentally, Meme coins lack the value anchors of traditional assets. "Their value is entirely based on collective belief, and belief is the most volatile thing in the world," said behavioral finance professor Richard Peterson. "Once newer, more interesting Memes emerge, funds will migrate without hesitation."

4. Investment Logic: How to Dance with Meme?
1. For investors wanting to join the game, strategies must be extremely clear and cautious:
• Top-tier strategy: Focus on proven top Meme coins like DOGE, SHIB, PEPE. They have the best liquidity and strongest consensus, making them "relatively safe." Consider gradual entries during deep pullbacks, e.g., DOGE below $0.12, SHIB below $0.000007.
• Public chain strategy: Avoid directly buying high-risk Meme coins; instead, invest in their underlying chain tokens like SOL, BNB, ETH. The Meme craze boosts these chains' trading volume, users, and attention—more stable value capture.
• Lottery approach: If chasing new Meme coins, treat it as "buying lottery tickets." Limit position size to no more than 5% of total portfolio, with strict stop-loss (e.g., -30%). Take profits quickly and only continue playing with gains.
Strict rules: never use leverage, never trust "scientist calls," never chase at FOMO peaks, never invest funds affecting your life.

5. Future Scenarios: Guessing the Endgame of Meme Coins
Meme coins may evolve into three scenarios:
• Scenario 1: Cyclical Asset – Meme coins become the crypto market's "volatility providers," periodically performing in mid and late bull phases. Each frenzy leaves chaos behind, only to return in the next cycle. This is the most likely scenario.
• Scenario 2: Mainstream Asset – A few top Meme coins (like DOGE) gain recognition through ETFs and mainstream financial products, becoming part of alternative asset allocations. This requires regulatory breakthroughs and institutional endorsement, with lower probability but possible.
• Scenario 3: Bubble Burst – Regulatory crackdown or catastrophic collapse destroys market confidence, causing Meme culture to fade from crypto mainstream. Given their resilient community, this scenario has the lowest probability.

"No matter the ending, Meme coins have proven that narratives and communities in the digital age are a form of asset," said a16z crypto partner Chris Dixon. "The question isn't whether they have 'intrinsic value,' but whether we're ready to understand this new form of value."

When PEPE's candlestick chart begins to be taken seriously by technical analysts, when hedge funds leverage Meme positions, and when the "sentiment index" influences decisions— the game rules of Meme coins have changed. This is no longer a playground for amateurs but a new table for professional gamblers.

PEPE's explosive rise is just the beginning. With more institutional funds and financial tools entering, Meme coin volatility will intensify, narratives will become more complex, and risks and opportunities will amplify. The only constant: in this game of pure emotion and liquidity, those who pay are always the last to leave.

Markets reward narratives but favor clarity even more. In Meme's carnival, is your position fuel for emotion or a rational bet? Remember, in crypto, most profits come from patience and catching a few key trends, not frequent trading on every hot spot. Meme market moves fast—when everyone is talking, it's usually the end.

6. If you’re really itching, you can place your orders and then forget about them.
General principle: treat Meme coin investing as "buying lottery tickets" or "risk hedging," not "value investing." Limit positions to no more than 5% of total funds. Focus your main energy and capital on the genuine value discovery and trend deployment we discussed earlier.

Option A: Focus on absolute leaders (moderate odds, higher probability)
1. Split 5% into two parts.
2. Use limit orders: place buy orders at DOGE $0.10-0.12, SHIB $0.000006-0.000007.
3. If filled, set stop-loss at 20% below buy price.
Logic: Bet on the old kings' return. They have the strongest survival ability and brand effect, sure to perform in a bull market.
Risk: May consolidate long-term, very low capital efficiency.

Option B: Chase hot new Meme coins (high odds, very low probability)
1. Split 5% into three parts.
2. Never chase highs. Only pick 1-2 new Meme coins with strong communities and deep liquidity (not PEPE or already surged ones).
3. During the first deep correction (>30%) after initial volume surge, invest 50U in the first part. Set strict -30% stop-loss.
4. Take profits quickly and reinvest gains.
Logic: Play for super high elasticity. Similar to the performance of dynamic BSC coins.
Risk: Highest risk of zeroing out, liquidity may vanish instantly.

Option C: Indirect participation via mainstream coins (lowest risk)
Avoid directly buying Meme coins. Use this part of funds to add to SOL or BNB.
Logic: Meme hype will bring huge trading activity, gas fees, and attention to their underlying chains, directly benefiting chain tokens. This is a safer, more sustainable way to capture value.

Strictly prohibited actions:
Trust any "wealth code" or "scientist calls."
Buy at the peak or during extreme FOMO (e.g., social sentiment index 94).
Use leverage or funds affecting your life.

7. Final Advice and Mindset Management
Currently, it’s strongly recommended to stay on the sidelines.
• The right timing: a sustainable Meme boom requires BTC, ETH, and other core assets to have clearly exited a bull phase and entered a consolidation with abundant liquidity. Conditions are not yet ripe.
• Poor risk-reward: PEPE and similar tokens have already surged sharply, with poor risk/return ratios. DOGE and SHIB are still struggling at lows, timing unknown.
• Protect principal: in early bull stages, safeguarding core holdings (BTC, ETH, quality altcoins like UNI) is more important than chasing high-risk volatility.

Note: This content is compiled from public market analysis and historical data, intended for informational purposes only and does not constitute investment advice. Crypto markets are highly volatile; all investment decisions should be based on independent research.
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