Meme Token Pepe Surged More than 15% This Weekend. Here's Why.

One of the most prolific and noteworthy meme coins in recent years, Pepe (CRYPTO: PEPE) has provided investors, traders, and speculators with plenty of volatility. As a top-40 cryptocurrency by market capitalization, Pepe's daily moves are meaningful for investors with exposure to vehicles tracking large-cap tokens. And given Pepe's status as a leading gauge of investor (and speculator) sentiment, this is one particular project investors can ignore at their own peril.

On that last note, I think Pepe's 15.2% surge from 4:00 p.m. on Friday to 4:30 p.m. Tuesday is worth considering. With some investors remaining cautious about whether this most recent rally will extend into the coming weeks, I'd argue the direction (and speed) of travel for PEPE tokens is likely to align with broader market conditions. That's been the case for much of the past year, in my view.

With that said, here are a few key factors investors appear to be relying on as reasons to hit the bid on Pepe this weekend.

Speculation fuels real on-chain activity for Pepe investors

Source: Getty Images.

Speculative rallies are one thing, and Pepe's price action in the past has indicated this is a token with the proven ability to rip higher when market sentiment broadly improves. That's at least part of the story with this weekend's move, as seen in some of the corresponding moves in competing meme coins.

That said, what I find particularly compelling about Pepe's recent surge is the associated rise in on-chain activity and whale accumulation. According to a number of reports on Pepe's trading volume, this token's daily trading volume surged to more than $1 billion. Such a move is notable, given Pepe's valuation of $1.8 billion, and it validates the idea that a surge in investor capital into a project like Pepe could lead to very large swings.

So-called whales (those with extensive digital asset holdings) also picked up their pace of token accumulation, increasing their aggregate holdings from 3.9 trillion PEPE to 4.02 trillion tokens this past week. Additionally, a drop in exchange balances (from 253 trillion tokens to 247 trillion tokens) indicates that more Pepe coins are being held in cold storage or in self-custody.

We'll have to see whether the broader market sentiment around meme coins continues to align with the continuation of these bullish fundamental catalysts. For now, it appears there are good reasons for those with a high risk tolerance to pile back into this trade in the near term.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.