By early 2026, Meme coin PEPE experienced a surge. It skyrocketed by 20%-30% within 24 hours, with the price hitting $0.0000049, and trading volume instantly soared to $500 million. Watching this rapid increase, many thought it appeared out of nowhere, but in reality, three hidden currents were at play: sector rotation, leverage funds, and community FOMO.

First, let's discuss the logic behind capital flow. Bitcoin is stuck at $88,000 with no movement, and liquidity for mainstream coins has dried up. Where are the idle funds going? Naturally, toward the most explosive opportunities. As a Meme coin, PEPE's volatility is 4-5 times that of Bitcoin. This high-risk, high-reward characteristic is a magnet for short-term profit-seeking capital. Plus, at the price of $0.0000049, retail investors see it as "cheap," and FOMO emotions are instantly ignited.

Leverage is the real driving force. Of the $500 million trading volume, 30%-40% comes from futures leverage trading. Open interest is increasing wildly, and big players' strategies are obvious—accumulating in spot while opening short positions in futures to hedge, steadily earning arbitrage profits.

Another detail not to be overlooked is the U.S. Tax-Loss Harvesting rule. By the end of 2025, investors sell PEPE at a loss to offset taxes, then immediately buy back positions after January. The key is that cryptocurrencies are not bound by the "wash sale rule" of the stock market, so they can be sold and repurchased immediately, directly fueling a wave of capital reflow.

The power of social media is also significant. The "PEPE Army" topic surpassed 50 million views within 6 hours, with KOL shoutouts, price trend validations, and community sharing of screenshots... These elements form a complete FOMO feedback loop, continuously attracting new addresses.