PepeCoin (PEPE) price action points to a potential 70% drop

Pepe (PEPE) price has dropped by more than 70% three weeks after establishing its record high of $0.00000449. And the memecoin could fall even more in the coming days, according to a mix of technical and fundamental indicators.

PEPE charts flash a classic bearish reversal pattern

From a technical standpoint, the price of PEPE could drop sharply from its current levels. At the core of this bearish outlook lies the classic head-and-shoulders (H&S) pattern.

Analysts who use technical analysi view the H&S pattern as a bearish reversal indicator for the unversed. It forms when the price forms three peaks atop a common neckline support; the middle peak, called “head,” is higher than the other two, called the “left shoulder” and “right shoulder.”

The H&S pattern resolves after the price breaks below its neckline. Meanwhile, as a rule of technical analysis, traders measure the pattern’s downside target by adding the maximum distance between the head and neckline to the breakdown point.

On May 22, PEPE broke below its H&S neckline near $0.00000156. That puts its downside target near $0.00000041 in June, down around 70% from current price levels.

Meanwhile, the H&S breakdown could exhaust midway as PEPE tests $0.00000082 for a rebound in June. This level, down about 30% from current price levels, served as support in early May; it further coincides with PEPE’s 0.786 Fib line.

On the other hand, the breakdown scenario will risk invalidation if the PEPE price reclaims the H&S neckline as support.

Will existing PEPE holders dump?

Despite its recent losses, PEPE still trades 4,000% higher when measured from its exchange debut price of $0.00000044. As a result, more price declines could prompt existing PEPE holders to lock their profits, thus exacerbating the bearish bias.

Related: How to benefit from Bitcoin volatility with market analysis and trading bots

The concerns arise if one tracks PEPE’s top-fifteen high-yielding addresses. Almost all the entities have reduced their PEPE holdings in recent weeks, with some even dumping their entire stash to secure early profits.

At the same time, the number of PEPE’s daily holders has flatlined since May 5, suggesting an absence of unique users entering the network.

That has translated into lower trading volumes across crypto exchanges, serving another bearish cue to existing token holders.

PEPE could duck the bearish outlook in the event of a broader crypto uptrend, led by potential rallies in the Bitcoin (BTC) and Ethereum (ETH) markets.