Is Bitcoin Overheated? Some believe that the answer is hidden in PEPE

Could Bitcoin (BTC) be headed for an inevitable comeback? Some crypto market observers believe the answer may be hidden in the frog-themed memecoin's price action.

In an October 27 post on X (formerly Twitter), OnChain Capital founder and Crypto Banter host Ran Nooner suggested that memecoin Pepe (PEPE) is a sign of an overvalued crypto market fever.

If you want to know when a pullback is coming, just look at $PEPE. It is literally an indicator when the market is hot. When people are confident enough to go there and it flows, that's your cue to get out. It works every time. pic.twitter.com/vMcqiddHwp

— Ran Nooner (@cryptomanran) October 26, 2023

“If you want to know when a pullback is coming, just look at PEPE. It's actually an index when the market is overheating,” Neuner said.

“When people are confident enough to go there and it's flowing, that's your cue to go out. It always works.”

Pepe has seen more than 100% gains recently, rising from $0.00000064 on October 20th to $0.00000134 on October 27th. At the same time as Pepe peaked, Bitcoin had already started to slide down from its recent annual high.

Neuner's theory has been shared by other crypto traders in the past. On September 23rd, trader Alex RTB told his 60,000 followers that he had started using Pepe as a reliable gauge for short-term declines.

This $PEPE pump is another indicator of the upcoming #BTC dump.

I speak from experience, you can check past price movements.

Pulling coins like $PEPE, $DOGE, $XRP, $IMX, $LINK always show bleeding, let's see how it goes this time. pic.twitter.com/piseCxRiqD

— Alex RT₿ (@rutradebtc) September 22, 2023

However, the theory has attracted its fair share of skeptics, who say the data doesn't always support the theory.

Related: BTC Price Pullback After $35K? Bitcoin funding rates will be ‘very positive'.

Dubai-based trader Retika told Cointelegraph that Pepe's latest move was largely driven by heavy news about the changes in the team and the fact that he had fired more signals, and that this was not a sign of more confidence in the market.

6.9T $PEPE tokens burned ~$6,000,000. https://t.co/aN5LRUFz8u

A new team of advisers has been brought in to guide Pepe forward. Core team CEX multi-sig wallet will use the remaining 3.79T tokens allocated for strategic partnerships and trading… pic.twitter.com/JN3ssvH0XL

— Pepe (@pepecoineth) October 24, 2023

Comparative data from TradingView shows that the price of Pepe often correlates strongly with Bitcoin, making it challenging to use memecoin as an indicator.

Retika, on the other hand, suggests looking at Solana's SOL (SOL) for a more reliable forecast.

“SOL has been a very good leading indicator for the moves so far. It has broken out of resistance at least a day ahead of BTC/ETH on this move. I am using it proactively to speculate on the upside,” she said.

Retika, however, clarified that SOL is not a perfect indicator but has performed well in recent moves.

Similarly, market analyst and avid crypto shitposter Pordart told Cointelegraph that Pepe is probably not the best gauge to gauge the future price action of majors like Bitcoin.

In Poordarts' view, Pepe is still too new to the market to have any “true lasting value” as a reliable metric to measure Bitcoin's price movement with any significant accuracy.

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