Why did PEPE suddenly surge over 20% at the start of 2026? On the surface, it seems driven by sentiment, but the real driving force is actually hidden in the tax reports.

At the end of last year, American investors executed a clever move during their annual account reconciliation — they sold off crypto assets with paper losses (like PEPE), using these paper losses to offset gains from other investments, ultimately reducing their tax liability. This tactic has been well-known in the US stock market for a long time, but there’s a huge loophole in cryptocurrency: the IRS treats them as "property" rather than "securities," so they are not subject to the "30-day wash sale rule."

The result is: investors can liquidate PEPE at the end of December to lower their taxes, then buy back immediately in early January, completing a textbook-style institutional arbitrage.

On-chain data has already confirmed this logic. A large amount of PEPE was sold off at the end of last year (to cut tax losses), and now it’s continuously flowing back into some major retail trading platforms. This rebound may look like FOMO, but it’s actually an organized, legally loophole-based capital flow.

So don’t be fooled by the price rebound. This kind of structural buying driven by the tax calendar can happen every year at the start of the year, but the window is limited. It can indeed push short-term prices higher, but if you’re expecting it to turn into a bull market? That’s overthinking it. This is just market participants playing with the rules, not a sign of fundamental improvement.