Pi Coin is resonating with top memecoins - Will the upward trend appear?

In the past week, the price of Pi Coin (PI) has increased by 5.5%, outperforming XRP, BCH, TON, and even UNI. However, the downtrend of the overall market has led investors to begin questioning the upcoming prospects of this altcoin.

A new perspective has emerged: the price behavior of Pi Coin is gradually resembling that of top memecoin projects – which could reshape its short-term trend.

Pi Coin is in harmony with the memecoin sector

The latest monthly correlation data from DeFillama shows that the market behavior of PI has changed significantly. Currently, it has a correlation coefficient of 0.76 with Dogecoin, 0.84 with Shiba Inu, 0.89 with Bonk, and 0.86 with Floki.

These numbers place PI in the "volatile zone" of memecoins, meaning that the price fluctuations of this group are likely to affect the price action of Pi Coin.

The correlation coefficient of PI with leading memecoins | Source: DeFillamaIf memecoins continue to rise sharply, PI could benefit from that momentum. Conversely, if the memecoin market cools down, PI is likely to fall as well. This makes the sentiment of the memecoin market the most important short-term driving force for the trend of Pi Coin.

The Pearson correlation matrix shows the degree to which two variables move together or in opposite directions, with a value close to +1 indicating a positive correlation, close to -1 indicating a negative correlation, and close to 0 indicating little relationship.

In the crypto market, this index is often used to measure the price volatility of this asset against other projects over a certain period of time.

Technical risks on the 4-hour chart

A high correlation with memecoin means that Pi Coin is easily affected by fluctuations in this sector. In recent days, memecoin has been under selling pressure, and if this trend continues, PI may fall.

Death Cross is about to occur | Source: TradingViewOn the 4-hour chart, the 20-period EMA or Exponential Moving Average (in orange) is preparing to cross below the 50-period EMA (in red) – a pattern known as a death cross. If this crossover is confirmed while the memecoin market sentiment remains negative, it could accelerate selling pressure and Pi Coin may enter a deeper correction.

Hope from RSI Divergence

The connection between Pi Coin and memecoin means that any recovery in this sector could affect the price volatility of PI.

On the daily chart, PI shows bullish divergence on the RSI as the price has made lower highs, while the RSI has made higher highs. The RSI is holding near the level of 43.71, and a breakout above 47 will confirm a new higher high, reinforcing the bullish trend.

Technical analysis of PI | Source: TradingViewIf memecoin rebounds, that momentum could be the missing trigger factor for Pi Coin, helping it recover to $0.39 and retest the $0.41 – $0.43 range. Until then, the setup remains unconfirmed and the risk of a death cross forming on the 4-hour time frame still exists.

The drop below $0.37 not only nullifies the divergence but also makes PI more vulnerable. This risk is even higher if the memecoin price continues to fall.

The price chart still looks optimistic. However, the trend of the entire memecoin group will be the deciding factor on whether this signal turns into a breakout or the price quickly reverses.

Vincent