TL;DR
- Analyst DonAlt has turned bearish on the memecoin PEPE.
- He observes a possible false breakout in PEPE, indicating a downward trend if the previous level is not reclaimed.
- He predicts a significant correction for memecoins, similar to previous cycles in the crypto market.
The well-known crypto analyst DonAlt, famous for his precise predictions in the cryptocurrency market, has recently adopted a bearish stance on the memecoin Pepe (PEPE).
Initially, DonAlt had observed a technical bullish breakout in PEPE, indicating potential growth if the price could maintain its new range.
However, this optimism was short-lived.
By May 18, DonAlt noted that PEPE was struggling to maintain its old range and warned of significant downside potential if the range high could not be sustained.
On May 20, DonAlt confirmed his fears: PEPE had fallen below its previous highs, configuring what in technical analysis is known as a “false breakout.”
This phenomenon occurs when the price of an asset exceeds a resistance level, only to retrace shortly after, suggesting that selling pressure has overwhelmed demand.
For DonAlt, this is a clear bearish signal.
According to his analysis, unless PEPE reclaims those previous levels, the outlook remains negative.
In addition to his specific analysis on PEPE, DonAlt has expressed broader skepticism about the memecoin market in general.
Based on data from previous crypto market cycles, he predicts that popular memecoins will face massive devaluations.
This is due to a recurring pattern in the history of cryptocurrencies, where initially popular assets see a significant correction, often of 80% or more, before new memecoins emerge and gain popularity, only to repeat the cycle.
Predictions for the Memecoin Market
In his comments, DonAlt points out that this cycle of boom and bust is not new in the cryptocurrency market.
According to him, it has been observed “a hundred times” in crypto history.
When a memecoin reaches its peak, it inevitably follows with a dramatic correction.
This affects not only lesser-known memecoins but also those considered the “blue chip” of this asset subgroup.
DonAlt’s outlook serves as a warning for memecoin investors.
He firmly believes that the assets traded with great enthusiasm today will suffer a value drop of 80% or more.
For investors, this means it is crucial to be prepared for these volatilities and understand that while the potential for gains is high, the risk of significant losses is equally high.
In his analyses, DonAlt also mentions Dogwifhat (WIF), another memecoin he considers bearish unless it can reclaim certain key price levels.
At the time of his analysis, WIF was trading at $2.72, near its range lows, according to CoinMarketCap.
DonAlt notes that for WIF to improve its outlook, it needs to surpass $2.77 or fall below $2.
The history of the crypto market is a constant cycle of innovation and decline, and DonAlt’s comments serve as a prudent reminder of the speculative and volatile nature of memecoins.
Investors should proceed with caution and be prepared for the inevitable ups and downs that characterize this market.
