A crypto investor recently swapped 0.125 ETH, then worth $250, for 5.9 trillion PEPE tokens, which are now valued at $1.02 million. However, the investor’s ability to cash in on this incredible profit may be hindered by liquidity issues surrounding the token. The SmartMoney...
A crypto investor recently swapped 0.125 ETH, then worth $250, for 5.9 trillion PEPE tokens, which are now valued at $1.02 million.
However, the investor’s ability to cash in on this incredible profit may be hindered by liquidity issues surrounding the token.
The SmartMoney is the luckiest guy I've seen recently.
If he sells at the current price of $0.0000001933, he will get a profit of ~$1.14M, more than 4,500x.https://t.co/cUqMO6zIVO pic.twitter.com/Ex5voyRvsa— Lookonchain (@lookonchain) April 19, 2023
Grzegorz Drozdz, the market analyst at Conotoxia Ltd., explained that it would take 46,200 years to liquidate the investor’s PEPE tokens, assuming non-declining demand.
Attempting to sell the tokens more quickly could result in the price dropping below the purchase level. This scenario has occurred before with Gurgavin Chandhoke’s memecoin, Pump Coin, which reached a $4.8 billion market cap, but Chandhoke was unable to sell due to a lack of market demand.
Memecoins have experienced surges in value, turning some early investors into millionaires on paper. However, the difference between asset valuations and real cash held can be stark, as illustrated by the PEPE token investor’s predicament.
The PEPE token, a Pepe-the-Frog-themed memecoin, has experienced a 240% increase in value over the past day, reaching a high of $0.000000342851, according to Coinmarketcap.
The token’s creators branded it as “the most memeable memecoin in existence” and declared that “the dog days are over” in reference to rival dog-themed memecoins.
While the PEPE token’s surge has made some investors millionaires on paper, realizing those profits may be difficult due to liquidity challenges in the memecoin market. The investor holding $1.02 million in PEPE tokens has yet to sell.
Red flags of the PEPE token
The recent excitement around the PEPE token demands caution from potential investors due to several red flags.
A concerning level of centralization exists, with six wallets holding over $1 million in PEPE each, giving them significant power over the token’s price.
These wallets received their supply simultaneously just four days ago, raising questions about possible coordination and intentions.
Furthermore, a suspicious trader’s story of turning $300 into millions may be a honeypot to attract investors.
This wallet shows no prior trading activity, hinting at a close connection with PEPE’s creators. With no clear use case beyond speculation, investors should approach PEPE with extreme caution.