Ai16z, the viral Solana meme coin focused on artificial intelligence, suffered a harsh reversal and moved into a local bear market.
This decline is mostly due to profit-taking, as the token was up by over 20,500% from its lowest level in November. Its market capitalization peaked at $2.3 billion earlier this week.
Ai16z (AI16z) dropped to a low of $2 on Saturday, Jan. 4, down by over 21% from this month’s high of $2.50.
Nansen data shows that the number of smart money holders has fallen from 118 in November to just 80 on Saturday. Their combined holdings have fallen from over 700 million tokens to below 500 million.
Based on their strong historical performance, smart money investors are usually more sophisticated than retail ones. These investors are known to buy crypto and stocks early and leave before they move into the markdown phase.
Smart money investors are selling | Source: Nansen
Another evidence of this distribution is that the number of ai16z tokens on exchanges surged in the past few days. They moved from 12.32 million last week to over 43.65 million on Saturday. Most of these tokens are in exchanges like Gate, Raydium, MEXC, and Orca.
Meanwhile, there are signs that many of the most profitable ai16z traders have started to take profits. The most profitable investor has made a profit of $148 million and has sold $4.6 million. He is still holding 96% of the investment.
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The next three most profitable investors have made $63 million, $57 million, and $44 million, respectively. These investors have maintained their positions. However, most other profit leaders have sold many of their tokens.
ai16z profit leaders | Source: Nansen Ai16z price crash 
ai16z price chart | Source: crypto.news
In addition to profit-taking, the ongoing ai16z price retreat is likely because of the Wyckoff Method. This popular theory explains how assets rise and fall in four stages: accumulation, markup, distribution, and markdown.
The chart above shows that the token remained in an accumulation phase in early November and then entered markup in December. This markup happened as crypto investors embraced fear of missing out.
Therefore, it has now moved into the distribution phase followed by a markdown phase, characterized by more selling than buying (seen in the charts above). As such, there is a risk that the token will fall to $1, down by 50% from the current level.
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