In the past few weeks, the token called Pepe Coin (PEPE) has brought some of its owners over 500% in profits. Despite the skepticism about it and expecting its collapse soon, it has been gaining momentum and keeps gaining profits.
The fears around the collapse arose because of the substantial number of tokens held by the whales, who got their hands on the token as it got issued for the first time in mid-April.
This spiked the interest of futures traders and shorts (bets against the token’s price).
The funding rates tied to the token remain negative, meaning the predominant bearish position in the derivatives market. A negative funding rate also means that shorts are predominant, thus they are willing to pay longs to keep their bearish bets open.
In the last 24 hours, an 80% price increase happened, leading to these traders having significant losses. However, data from CoinGlass show that shorts against PEPE lost at least 11 million USD within the last 24 hours on multiple exchanges, and traders lost a little under 6 million USD on just the OKX crypto exchange.
Other losses were on Huobi, around 2.2 million USD; Bybit, around 3.6 million USD; and several hundred thousand USD on BitMEX. In fact, all these exchanges began offering PEPE futures trading in the last week.
PEPE losses reached 3rd place in futures liquidation losses, right after Bitcoin (BTC) and Ethereum (ETH).
When an exchange forcefully closes the trader’s leveraged position, due to either total or partial loss of the trader’s initial margin, this is what liquidation means. It usually happens when the trader is unable to meet the margin requirements for a leveraged position. In other words, when a trader fails to have sufficient funds to keep the trade open.