Analysis

Should PEPE traders brace for volatility as short squeeze potential builds?

2min Read

PEPE traders and investors should expect the volatility to continue.

Posted: March 7, 2026 Avatar

By: Akashnath S Journalist Edited By: Jibin Mathew George PEPE traders brace for volatility as short squeeze potential builds

Akashnath S Journalist Edited By: Jibin Mathew George Posted: March 7, 2026 Share this article

The memecoin market has seen its collective market capitalization drop by 48% over the past year, and 6.9% over the past month, according to CoinMarketCap. According to Glassnode, the memecoin sector has only gained by 2.2% over the past week, compared to the 4.6% DeFi and L2 sectors managed.

Among memecoins, PEPE’s weakness can be highlighted as an outlier. At the time of writing, the short-term and long-term charts were bearish, and the $0.00000336 local lows were under pressure once again.

The Open Interest was in decline as the prices bled to show speculators were not willing to bet on a price recovery. Combined with Bitcoin’s [BTC] fall below $70k, it would seem that the next few days could see further drawdown for PEPE holders.

A short squeeze can materialize in the coming weeks

Source: CoinGlass

Just like Bitcoin, PEPE also has a large number of short liquidation levels overhead. The 90-day liquidation map showed that the cumulative short liquidation leverage was much higher than the long liquidation leverage.

In other words, a price move higher would liquidate a lot more short positions than a price move of similar magnitude would wipe out long liquidations. This could be an attractive prospect for counter-trend traders, but they shouldn’t be in a hurry.

Bitcoin has a chance of dropping to $65.3k in the coming days. Whether it can defend the $63k-$65k area, or will plummet to $60k and below, will decide which way PEPE likely goes.

Traders’ call to action – Wait

Source: PEPE/USDT on TradingView

PEPE has not been trading in a feasible area for swing traders. At press time, it was just below the long-term support at $0.00000342. The downtrend could see it fall to the $0.00000303 extension level to the south just as easily as it could bounce to the $0.00000379 local highs.

What is more likely? It is hard to tell because PEPE will likely closely follow Bitcoin trends. As things stand, BTC looks poised for more downside over the weekend.

Swing traders should remember the magnetic zones above $0.0000038 are a valid target. Memecoins tend to rally quickly before retracing the move, like the mid-February rally to $0.000005 that appeared to break the downtrend but didn’t.

Final Summary

PEPE traders should expect more losses since Bitcoin has a bearish short-term bias.
Traders should respect the capability of memecoins to blast higher even during times of market stress.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

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Akashnath S

Akashnath S is a Senior Journalist and Technical Analysis expert at AMBCrypto. He specializes in dissecting price action, identifying key market trends through advanced chart patterns, and forecasting both short-term and long-term asset trajectories. More Articles