As of the time of writing, dogwifhat [WIF] is trading at $3.22, up 5% in the last 24 hours. These gains have brought the memecoin's monthly increase to 54%, attracting distribution from long-term holders.
According to Lookonchain, a trader known as 'blockgraze' transferred 1.5 million WIF tokens (worth $4.56 million) to Coinbase after holding them for 8 months.
While the trader clarified that he has not sold these tokens, the movement of this capital aligns with some bearish signals on WIF's daily chart.
The descending triangle pattern is evident, suggesting that dogwifhat may trend towards stagnation. The support level at $3 is crucial for WIF to avoid this bearish trend.
If WIF rebounds to the resistance level of $4.83 and collects liquidity at that level, it would invalidate this bearish argument.
Currently, technical indicators show mixed signals for WIF's future price movements. The Chaikin Money Flow (CMF) has turned negative, indicating that selling pressure is dominant.
However, the Awesome Oscillator (AO) indicator has turned green, indicating a bullish divergence. As bulls and bears vie for control, the derivatives market suggests that liquidations may determine WIF's next move.
Surge in WIF long liquidations
Data from Coinglass shows that a surge in long liquidations could hinder WIF's rebound.
In just two days, over $5 million worth of WIF long positions were liquidated, further increasing the dominance of such liquidations over the past two weeks.
When long positions are liquidated, traders are forced to close their positions by selling tokens. Forced selling may exceed buying activity, leading to a stagnation in the upward trend.
The liquidation heatmap for dogwifhat has a one-week review period, clearly showing these surges in liquidations each time the uptrend fails.
However, there remains a hot liquidation zone below the price. Liquidation clusters often act as magnetic zones, potentially leading to a decline in WIF. If WIF falls below $3, these liquidations could further push down the price.
WIF funding rates hit an all-time high
Despite long traders being liquidated, these positions continue to dominate the market, indicating an overall bullish sentiment towards WIF.
As of the time of writing, WIF's funding rate reached a historic high of 0.0555%, indicating that traders are willing to pay more to maintain their long positions.
However, if WIF experiences an unexpected price drop, traders should be wary of potential long squeezes, as this may lead to a surge in liquidations, exacerbating the downward trend.