Over the course of September, Dogwifhat [WIF] has been showing bearish signs, consolidating following a rally in August that saw prices reaching $2. Currently trading at $1.553, the token has witnessed three consecutive green candles, indicating a potential recovery. Market sentiment is upbeat amidst anticipation of a Fed rate cut, which has already propelled BTC above $60K.
Of particular note is the surge in WIF above $4 when BTC hit its all-time high back in March. Subsequently, both assets experienced declines, with WIF undergoing a sharper pullback.
Market analysts now speculate that this downtrend could have marked the bottom for WIF, with various factors aligning for a probable breakout.
Institutional Players Leveraging WIF’s Downtrend
During the period when WIF tested the $4 level, there was a spike in positive net inflows amounting to $19M. Such occurrences are often indicative of day-trading strategies, with investors capitalizing on profits before momentum diminishes.
Despite subsequent high outflows, WIF continued to retrace its steps, eventually dropping to $1. This anomaly has spurred insights from CryptoCrypto, suggesting an underlying pattern. While WIF’s price mirrored Bitcoin’s downward trajectory, the substantial withdrawals hint at an accumulation phase by institutional investors gearing up for a potential upsurge.
In essence, astute investors likely seized the opportunity created by WIF’s low valuation to absorb selling pressure and set the stage for a future market peak.
With the market showing signs of recovery post-consolidation, the question lingers: could this accumulation lead WIF to $2 before revisiting its previous all-time high?
Imbalanced Distribution Could Impede the Rally
Currently boasting a market capitalization of $1.5B, WIF has approximately 998 million tokens in circulation. Data from SolScan reveals a skewed distribution, with the top decile holding more than 40% of the total supply.
As a result, this uneven distribution might act as a stabilizing force during market downturns but could also pose an obstacle to a rapid rally if major holders lose confidence.
Nevertheless, given the strategic targeting of WIF’s bottom by institutional investors, optimism remains high for a potential surge, unless the token faces resistance at the $2 level, which still remains a feasible target.
A Critical Path Ahead
While accumulation managed to prevent WIF from slipping below $1, it might not suffice to fuel a robust bullish run, as illustrated in the following chart.
In comparison to the mid-July rally that propelled WIF above $2, the current momentum appears to fall short. The Open Interest (OI) in USD stands at $156M, well under the $356M recorded during the previous rally.
However, the timing is crucial. The bullish trend of BTC has shifted sentiment in favor of WIF, indicating a growing interest within the community. A surge in trading volume could further bolster momentum.
Overall, the appeal of the memecoin is on the rise. If the current trend persists and institutional investors maintain their bullish outlook, WIF stands a chance to approach the $2 mark.