An investor in the memecoin, PEPE, has seen their investment of $250 skyrocket to $1.02 million in four days. The token’s value has surged as it branded itself as the “most memeable memecoin in existence” and found growing demand from investors. However, the investor may face challenges in realizing their profits due to the token’s low liquidity. As a result, selling such a large number of tokens could result in a considerable slippage during the trade, lowering the actual value of the tokens.
According to Grzegorz Drozdz, market analyst at Conotoxia Ltd., the investor’s attempts to exit the position could lead to a fall in the price, especially if the demand is non-declining. The issue with low liquidity tokens is not just the lack of buyers but also the fact that liquidity is typically concentrated in automated market maker pools. The presence of sufficient liquidity in the pool, rather than the availability of buyers, poses the primary challenge to realizing profits.
The PEPE token has surged over the past four days, and as with many other memecoins, it has created overnight millionaires on paper. However, the challenge lies in realizing those profits. The lucky PEPE investor is yet to sell their tokens, and Decrypt’s request for comment remains unanswered.