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, Shiba Inu, and Pepe

. 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.

It shows that many traders were overly bullish on WIF, possibly expecting the price to continue rising after the Aug. 9 peak. They opened leveraged long positions in the futures market, betting on further price increases.

As the price of WIF began to decline, it triggered margin calls for these over-leveraged long positions. If traders cannot meet these margin calls by adding more collateral, the exchange automatically liquidates their positions to cover the losses.

This forced selling amplifies the downward pressure on the price, contributing to the 30% correction.

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.

As a rule, an H&S pattern resolves when the price breaks below the neckline while accompanying a rising trading volume. It then falls by as much as the maximum distance between the head’s top and neckline.

As of Aug. 17, WIF attempted to break below its H&S neckline level of around $1.46. Should it be successful, then its price may fall toward the downside target of around $0.725 by September, down approximately 48% from the current price levels. 

Conversely, reclaiming the neckline as support, followed by a close above WIF’s accumulation area — the $1.48-1.69 range highlighted via the red bar — may invalidate the H&S setup altogether. Should it happen, WIF’s immediate upside targets are around its 50-day (the red wave) and 200-day (the blue wave) exponential moving averages.