The resurgence of the meme coin trend is evident in the cryptocurrency market, with cryptocurrencies such as PEPE showing signs of being overvalued. This overvaluation may indicate a potential opportunity for short-selling, as indicated by the rising open interest (OI) and elevated funding rates.

Historically, the meme coin frenzy has been followed by a local market peak, succeeded by a significant downturn that rewarded those engaging in short-selling of these digital assets. If a similar pattern unfolds, the crypto market faces the risk of another downturn, despite positive social traction from influencers.

As of the latest update, PEPE boasts an open interest of $644.85 million, securing the fifth position on CoinGlass. This figure accounts for 10% of the meme coin's market capitalization of $5.98 billion, with a trading value of $0.0000142. Despite a notable 20.34% decline in the 24-hour volume reaching $1.55 billion, the market's open interest has decreased by 6.37% in the meme coin category.

The funding rates on PEPE from consolidated exchanges reveal a dominance of long positions within the open interest. Currently, traders holding long positions are paying short-sellers an annual percentage rate (APR) of 42.57% to rectify the imbalances in derivatives trading.

This high funding rate presents an opportunity for traders to initiate short positions against PEPE and take advantage of the prevailing imbalance. However, engaging in short-selling at this juncture involves a speculative element, given the potential unpredictability of the market's trajectory.

Traders in the cryptocurrency sphere have begun positioning themselves in anticipation of this short-selling window, as evidenced by the activity on the liquidations heatmap. The accumulation of liquidity from these traders could trigger a short squeeze, causing losses for bearish speculators.

Recent price movements of PEPE have led to liquidation of long positions through a long squeeze, indicating the current market conditions.

The direction of the meme coin's movement will be influenced by the capital volumes entering for both short and long positions in the coming days. Traders and speculators operating in the cryptocurrency realm should exercise caution and comprehend the volatile nature of these digital assets.

Disclaimer: This information is not intended as investment advice. Investment activities carry inherent risks, and individuals should be aware that capital is at stake when investing.