Is it a Bear Trap?

PEPE price slipped below $0.00008 on Monday, August 12, marking a 15% decline over the last three days. While bulls who bought the dip during last week’s rebound are booking profits, derivatives market data suggests the ongoing PEPE correction could be a bear trap.

PEPE Price Fails to Flip $0.00001 Resistance

The PEPE price rally stalled over the weekend following a remarkable rebound from the August 5 market crash. The initial negative sentiment surrounding the PEPE market started to fade after the crash, with a strong rebound that saw the price climb significantly.

The bullish news from Brazil approving spot SOL ETFs and Russia authorizing crypto mining provided an additional boost. These developments propelled SOL to a 54.3% rally between August 5 and August 9, reigniting investor interest in the broader crypto markets.

However, this bullish news cycle may have created an artificial demand surge without any real short-term improvement in market fundamentals. The substantial gains on a weekly timeframe prompted short-term traders to book profits. Consequently, the PEPE price was rejected at $0.00008, leading to a 15% decline over the weekend.

Instead of holding out for a $0.000010 breakout, many short traders opted to lock in profits generated from PEPE’s 57% rebound between August 5 and August 9. Recent movements in PEPE derivatives markets, however, suggest that this could be a bear trap.

Bulls Traders Standing Their Ground with $5.48M Leverage Positions

Despite PEPE’s 15% correction, there has not been a corresponding negative shift in short-term traders’ sentiment. Coinglass’ Liquidation Map, which shows the value of active leverage positions around key price levels, highlights the current situation.

Currently, there is a concentration of leverage LONG positions around key price levels, underscoring the potential for a bear trap.

PEPE’s long leverage positions currently stand at $5.48 million, while bears only have $5.13 million in active short positions. The fact that long positions outweigh shorts by $0.35 million after a 15% dip suggests that bull traders are determined to defend their positions.

If bears fail to force a decisive breakdown below $0.000082, this could evolve into a bear trap—a scenario where a price decline lures in short sellers, only for the price to reverse and rise sharply, trapping the shorts in losing positions.

PEPE Price Forecast: Next Rally Could Trigger $0.000010 Breakout

Although overall crypto market sentiment remains bearish, data shows that PEPE bulls are exhibiting strong resilience. This resilience could see PEPE maintain relatively high support levels and potentially spark a major breakout in the next phase.

If PEPE price manages to hold above $0.000082, a bullish sentiment could begin to dominate, leading to another rally. A successful rally could target the $0.000010 resistance level, which, if broken, might pave the way for further gains.

Key support remains at $0.00008, where bulls are likely to defend their positions vigorously. A break below this level could invalidate the bullish outlook, but a strong bounce from here might reignite buying interest, driving the price toward the $0.000010 level.

Given the current technical indicators and market conditions, the next PEPE rally could indeed trigger a breakout past $0.000010, signaling a potential shift in market momentum.