Why is Solana's Dogwifhat (WIF) memecoin crashing?

WIF price risks declining by another 48% due to the formation of a classic bearish reversal setup.

Dogwifhat (WIF), the fourth-largest memecoin by market capitalization, is on the brink of erasing the recovery it achieved after the Aug. 5 crypto market crash. WIF has dropped approximately 30% from its Aug. 9 local top of around $1.95, bringing its price down to $1.36 as of Aug. 17.

WIF crashes alongside other memecoins 

WIF’s price declines accompany similar downside moves across other top memecoins, namely Dogecoin 

DOGE

$0.10

, Shiba Inu 

SHIB

$0.000013

, and Pepe 

PEPE

$0.000008

. For instance, DOGE, the largest memecoin by market capitalization, has dipped by approximately 10% in the last nine days.

Among the leading memecoins, WIF has experienced more significant losses over weekly and monthly timeframes. For instance, WIF’s 30-day returns are around -42%, far exceeding DOGE (-15%) and SHIB

(-23.5%)

WIF had an exceptional year-to-date performance, with returns reaching approximately 708%, second only to Popcat (POPCAT), another Solana-based token that surged by around 4,570%. Such substantial gains likely attracted profit-taking from early investors, leading to increased selling pressure.

Long liquidations outnumber shorts

Dogwifhat's 30% correction from its Aug. 9 local top coincides with a higher number of long liquidations in the WIF futures market relative to short liquidations.

Over the past nine days, there have been cumulative long liquidations of $6.932 million versus $3.16 million in short liquidations, according to Coinglass data.

Is Dogwifhat price bottoming out?

WIF’s downside risks remain intact as it forms what appears to be a classic head-and-shoulders (H&S) pattern. 

An H&S pattern is characterized by forming three consecutive peaks — the middle peak called the head being higher than the other two called shoulders — atop a common support level called the neckline.