The memecoin sector has lost nearly $8 billion in 2026, with many tokens down over 60%. Despite a 47% drop, PEPE shows resilience with strong social activity, rising Open Interest, and significant whale accumulation, suggesting a potential bear trap could be forming around key historical support levels.
The broader memecoin market has entered a severe downturn, shedding nearly $8 billion in value this year according to CoinMarketCap. Many tokens have fallen more than 60%, demonstrating a stark divergence from past rally patterns.
Even established assets like PEPE have not been immune, declining 47% over the same period. However, social activity remains strong, with recent positive sentiment reaching 80.95% according to data.
The token has now retraced to a crucial support level near $0.0000035, which previously triggered a 152% rally in April 2024. Concurrently, its Open Interest has increased by approximately $30 million this week, signaling renewed trader positioning.
On-chain metrics point to a potential short squeeze scenario. Arkham Intelligence flagged a divergence with PEPE‘s Funding Rate turning negative, indicating heavy shorting.
Meanwhile, the top 100 wallets have accumulated 23.02 trillion PEPE coins since October according to Santiment data. This accumulation is already visible in its price action against Bitcoin.
This combination of rising Open Interest, heavy accumulation, and a negative funding rate creates a textbook bear trap setup. The convergence of these factors suggests shorts may be at risk if momentum shifts.
