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The most significant new memecoin of 2023, Pepe (PEPE), encountered one of the most unfortunate outcomes that can occur to a new cryptocurrency — a partial rug pull after its anonymous developers unexpectedly liquidated nearly $16 million worth of the token on August 24.
The official Pepe X (previously known as Twitter) account clarified that the decline was attributed to “three former team members” acting without authorization and selling the tokens — a decision that caused the price of Pepe to drop by as much as 26% in the subsequent days, with little recovery.
an announcement to the $PEPE community:
On August 24th, 2023, a series of unforeseen transactions occurred from the $PEPE multisig CEX
Wallet, where approximately 16 trillion $PEPE tokens (valued at around $15 million USD) were moved to various cryptocurrency exchanges (OKX, Binance,… pic.twitter.com/iZmXV1TAvw— Pepe (@pepecoineth) August 26, 2023
In the aftermath, cryptocurrency investors and memecoin fans are still contemplating whether the frog-themed token can ever regain its pre-rug value.
In an interview with Cointelegraph, crypto trader Reetika Trades expressed some potential optimism for PEPE, despite acknowledging that the manner of the developers’ sale was not ideal. She believes that this incident will ultimately have “negligible effects” on the token’s long-term prospects.
“It’s a memecoin with no promise of utility, so the departure of some developers doesn’t impact the token,” she stated.
“By selling a large portion of the coins now, the risk of the total number of potential coins the developers could offload on investors in the future has diminished — which is healthier in the long term.”
However, Reetika also noted that Pepe is a memecoin that has established itself by being clear about its lack of intrinsic value and underlying worth. Consequently, the price of memecoins is subject to significant volatility, and any investment in these assets should be regarded as more akin to gambling.
Similarly, pseudonymous trader Horse remarked that removing the remaining supply of tokens from the developers who sold them was a positive step for the long term, particularly if it aims to become comparable to Dogecoin (DOGE).
“I believe it will make a comeback.”
These views were supported by a report from crypto data provider Kaiko, which observed that despite the abrupt price drop, the liquidity of the memecoin remained surprisingly robust.
Pepe liquidity remained strong despite the sudden decline. Source: Kaiko
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“It appears that the team’s potential abandonment of the project is not yet the death knell that some have suggested,” Kaiko researchers concluded.
However, not everyone is convinced that the future looks particularly bright for Pepe.
Pepe might not be making a comeback
Analysts from Santiment cautioned that traders should prepare for “higher volatility” even though Pepe has become the top trending cryptocurrency following the rug pull allegations.
If you are riding the wave of #memecoins during these uncertain market conditions, #Pepecoin has quickly become the top trending #crypto topic this weekend. Former team members are accused of removing $16M. Expect even more high volatility than usual. https://t.co/iQLD7h224s pic.twitter.com/UOR4sTcWwv
— Santiment (@santimentfeed) August 27, 2023
Offering perhaps the most pessimistic perspective on Pepe was notable trader Kaleo, who expressed a desire for the memecoin to “completely collapse.”
This may be a controversial stance, but at this point, I hope $PEPE completely collapses. While I recognize that a community has formed outside of the founders — the fact remains, as long as the coin survives and performs well — the founders continue to benefit from it.
And they don’t…— K A L E O (@CryptoKaleo) August 26, 2023
Even after the announcement of the new direction from the Pepe team, Kaleo stated he would remain on the sidelines. However, he conceded that Pepe would likely “rally to new highs from here just to spite me because I chose to take a perceived moral high ground and step back.”
Related: PEPE price to zero? Pepecoin rug pull allegations put memecoin at risk
Meanwhile, following the upheaval with Pepe, an anonymous team has set out to create yet another iteration of the original Pepe token, which they assert is free from the complications that accompanied its predecessor.
In an interview with Cointelegraph, the team behind the project characterized the new PEPE token as the “true essence” of decentralized finance.
“The new Pepe token is essentially what the old Pepe token should have been; decentralized, community-driven, no team tokens, and deflationary,” they stated.
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