PEPE Holder Turns $250 into $1M in Four Days. But Can They Sell It?

Is memecoin season actually again?

A crypto investor swapped 0.125 ETH, then value $250, for five.9 trillion PEPE tokens 4 days in the past. These tokens are at present value $1.02 million. 

However the PEPE holder may wrestle to understand that revenue, because of liquidity points across the token. Whereas the memecoin investor at present holds $1.02 million in PEPE tokens, upon nearer inspection it is clear that there’s a distinction between the valuation of belongings “on paper” and actual money held.

“With 5.9 trillion PEPE tokens of their portfolio, it could take 46,200 years to liquidate these belongings, assuming non-declining demand,” Grzegorz Drozdz, market analyst at Conotoxia Ltd., advised Decrypt through electronic mail. “Any try and exit the place extra shortly may result in the worth falling even beneath the acquisition degree.” Drozdz likened the issue to “billionaires trying to monetize their wealth,” including that, “An try and promote the wealth may result in a collapse of their share worth.”

It is akin to a earlier case the place Gurgavin Chandhoke made a memecoin referred to as Pump Coin, which skyrocketed to a $4.8 billion market cap—with him proudly owning “99%” of the tokens. Nonetheless, because of the lack of market demand, Chandhoke was unable to promote.

“The difficulty with low liquidity tokens isn’t solely the shortage of patrons but additionally the truth that liquidity is often concentrated in automated market maker swimming pools.” Adrian Hetman, tech lead triager at Web3 bug bounty platform ImmuneFi, advised Decrypt. He defined that the problem is because of “the presence of adequate liquidity within the pool reasonably than the supply of patrons.” For the PEPE holder, Hetman added, “the sale quantity represents a good portion of the pool’s general liquidity, leading to appreciable slippage throughout the commerce. Consequently, the income won’t be near the usual worth one would anticipate when promoting on the spot worth.”

What’s PEPE?

Pepe-the-Frog-themed memecoin PEPE has surged over the previous 4 days after branding itself, “essentially the most memeable memecoin in existence.” Its creators referenced each the crypto bear market and rival dog-themed memecoins Dogecoin and Shiba Inu, noting that “the canine days are over.” Over the previous day, it is up over 240%, reaching a excessive of $0.000000342851, per knowledge from CoinGecko.

Whereas PEPE’s surge has turned some early patrons into millionaires—on paper, at the very least—the fortunate investor has but to promote their tokens and has not replied to Decrypt‘s request for remark.