dogwifhat [WIF] is trading at $3.22 at press time, up 5% over 24 hours. These gains bring the memecoin’s monthly gains to 54%, with the uptrend attracting allocations from long-term holders.
According to Lookonchain, a trader known as “blockgraze” moved 1.5 million WIF tokens (worth $4.56 million) to the Coinbase exchange after holding the tokens for eight months.
While the trader clarified that he has not sold the tokens yet, the movement of these funds coincides with some bearish signs on WIF’s one-day chart.
The descending triangle pattern is evident, suggesting that dogwifhat could be headed for a downturn. The $3 support level is crucial for WIF to avoid this bearish trend.
This bearish thesis will be invalidated if WIF rebounds above the $4.83 resistance and collects liquidity at this level.
Currently, technical indicators show mixed signals for WIF’s future price action. The Chaikin Money Flow (CMF) has turned negative, indicating that seller pressure is dominant.
However, the Awesome Oscillator (AO) indicator has turned green, indicating a bullish divergence. As bulls and bears fight for control, derivatives markets suggest that liquidations could determine WIF’s next move.
WIF long liquidations surge
A surge in long liquidations could put a damper on WIF’s rally, according to Coinglass.
In just two days, over $5 million worth of WIF long positions were liquidated, further adding to the dominance of such liquidations over the past two weeks.
When long positions were liquidated, traders were forced to close their positions by selling tokens. The forced selling may have outstripped the buying activity, causing the rally to stall.
Dogwifhat’s liquidation heatmap, which has a one-week lookback period, clearly shows these surges in liquidations every time an uptrend fails.
However, there is still a hot liquidation zone below the price. Liquidation clusters tend to act as magnetic zones and can cause WIF to fall. If WIF falls below $3, these liquidations could push the price down further.
WIF financing rates hit record high
Despite the liquidation of long traders, these positions continue to dominate the market, showing an overall bullish sentiment towards WIF.
At press time, WIF’s funding rate hit an all-time high of 0.0555%, suggesting that traders are willing to pay more to maintain their long positions.
However, if WIF sees an unexpected price drop, traders should be wary of a potential long squeeze as this could lead to a surge in liquidations that could exacerbate the downtrend.
