Dogwhipheart (WIF), the fourth largest crypto coin by market cap, is looking to erase the recovery it made following the crypto market crash on August 5. WIF has fallen by about 30% from its August 9 high of around $1.95, falling to $1.36 as of August 17.
WIF crashes along with other Mimecoins.
The price decline of WIF is accompanied by similar declines in other top memecoins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE). For example, DOGE, the largest memecoin by market cap, has fallen by around 10% over the past nine days.
Among the major Mimecoins, WIF has experienced greater losses over the weekly and monthly periods. For example, WIF’s 30-day return is around -42%, significantly outperforming DOGE (-15%) and SHIB (-23.5%).
WIF has performed well so far this year, returning around 708%, second only to another Solana-based token, POPCAT, which has surged around 4,570%. Such significant gains have led to profit taking by early investors, which has led to increased selling pressure.
Long-term liquidations are more common than short-term liquidations.
Dogwifhat’s 30% decline from its August 9 local high is related to more long-term liquidations than short-term liquidations in the WIF futures market.
According to Coinglass data, cumulative long liquidations over the past nine days were $6.932 million, while short liquidations were $3.16 million.
This shows that many traders were overly bullish on WIF, probably expecting the price to continue to rise after the August 9 peak. They opened leveraged long positions in the futures market, betting on further price increases.
As the WIF price began to decline, margin calls were made on these over-leveraged long positions. If traders were unable to meet these margin calls by adding more collateral, the exchange would automatically liquidate the positions to cover losses.
This forced selling put downward pressure on prices, contributing to a 30% drop.
Is Dogwifhat price hitting rock bottom?
The downside risk for WIF remains as it forms a classic head and shoulders (H&S) pattern.
The H&S pattern is characterized by the formation of three consecutive peaks, with the middle peak, called the head, higher than the other two peaks, called shoulders, and above a common support level, called the neckline.
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Typically, the H&S pattern is resolved when the price breaks below the neckline and volume increases. It then falls to the maximum distance between the head top and the neckline.
As of August 17, WIF has attempted to break below the H&S neckline level of around $1.46. If successful, the price could fall to the downside target level of around $0.725 by September, which would represent a decline of around 48% from current price levels.
Conversely, a close above the WIF accumulation area ($1.48-1.69 range highlighted by the red bar) after reclaiming the neckline as support could completely invalidate the H&S setup. If this happens, the immediate upside targets for WIF are near the 50-day (red wave) and 200-day (blue wave) exponential moving averages.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.