The cryptocurrency market is no stranger to volatility, but the recent collapse of Solana Dogwifhat (WIF) has surprised many investors.
Being one of the many memecoins to gain traction with a 20,000% increase in value in a week and a $22.6 million capitalisation, this cryptocurrency was celebrated for the community-driven hype that accompanied it. However, among other top memecoins, WIF has experienced the most losses over weekly and monthly timeframes. For instance, WIF’s 30-day returns are around -42%, far exceeding DOGE (-15%) and SHIB (-23.5%).
But what went wrong?
The Rise of Solana Dogwifhat (WIF)
Dogwifhat (WIF), launched in late 2023 as a meme coin based on the Solana blockchain. The token of this memecoin is the picture of a Shiba Inu dog wearing a pink knitted cap. An interesting part of the Solana Dogwifhat is that unlike other meme coins trying to woo investors with ambitious plans for the future and a high-quality website, WIF headline plainly stated that it's "literally just a dog wif a hat.”
Solana Dogwifhat (WIF) exploded in 2024. Although it began the year with an all-time low of under $0.07, it has since grown exponentially, reaching a high of $3.53 on March 14. This has pushed the market cap from around $200 million to well over $3 billion, helping the token cement itself in the top 50 tokens by market cap.
There have been several catalysts for WIF, such as Binance offering the token and LeBron James wearing a pink hat. While the event with James was a coincidence, it brought more attention to the token.
The Collapse of Solana Dogwifhat: What Went Wrong?
On June 23, Solana Dogwifhat’s market cap fell by a whopping 9% in 12 hours. Although it currently has the fourth largest memecoin market cap, Pepe (the memecoin with the third largest market cap) boasts of three times the market cap of Solana Dogwifhat. The collapse of Solana Dogwifhat (WIF) is due to these three reasons:
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Fading Investor Interest
One of the most impactful events that has led to WIF’s price decline is the token dump by a major whale. According to Solscan, on June 20, Solana Dogwifhat let go of 5.97 million tokens which began the collapse we have all come to see. This dump alerted investors and led to large-scale sell-off.
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Massive Long Liquidations
Another factor that has contributed to WIF’s price decline is the wave of long liquidations. In a space of 24 hours, Solana Dogwifhat experienced the liquidation of long positions worth $1.6 million.
These long liquidations have spiked pessimism and hence further deepened WIF’s price decline.
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Solana Dogwifhat Drops Below $2 Critical Juncture
Recently, WIF’s price declined from $2.6 to $1.75, creating a negative outlook. This drop signals a major breach of a crucial support level and has hence, raised concerns among investors.
The loss of this support has shifted market sentiment to bearish, with technical indicators suggesting that the price could fall even further.
Key Takeaway
The collapse of Solana Dogwifhat (WIF) is a reminder of the volatility of the crypto world. Despite its rise to fame, community hype and endorsements, WIF couldn't keep its momentum going.