What's driving the 13% price increase for WIF?

Author: Nancy Lubale, CoinTelegraph; Compiler: Baishui, Golden Finance

Solana-based memecoin project Dogwifhat (WIF) rose 13% in a day, reaching a high of $1.77 on August 6. This is part of a general rebound in WIF prices after a 63% drop from a high of $2.89 two weeks ago.

WIF/USD daily chart. Source: TradingView

In contrast, while most of the largest cryptocurrencies in the space were in the red on August 7, memecoin’s total market capitalization still rose 5.3%, according to CoinMarketCap.

Price performance of the top 10 memecoins. Source: CoinMarketCap

Solana news source SolanaFloor claimed in an August 7 post by X: “Solana memecoin $WIF becomes the largest gainer among the top 100 coins by market cap.”

Dogwifhat remains the fourth largest memecoin by market cap, just below Pepe, which has a market cap of almost twice that of Dogwifhat at $3.13 billion.

Meanwhile, anonymous analyst Kyledoops found WIF at $1.74 and said that WIF remains the preferred altcoin in the Solana ecosystem, although it still faces strong resistance on the road to recovery.

"While the EMA Ribbon may see a small pullback, $WIF remains the preferred #Solana."

WIF/USD daily chart. Source: Kyledoops

Meanwhile, trader CryptoJack believes that WIF’s recent drop below $1.5 was a “fake” as the memecoin quickly “returned to the range.”

Source: CryptoJack

From a technical perspective, BTC price is forming a V-shaped recovery chart pattern on the daily chart, as shown in the figure below. The presence of two green engulfing candles on the daily chart suggests that bulls are in control of the price.

The $1.50 mark is an immediate support level for memecoin. The relative strength index rose from 27 to 38 between August 5 and August 8, indicating that buyers are returning to the market.

WIF/USD daily chart. Source: TradingView

Thus, if buying increases from current levels, the price could move higher and face resistance at the 50-day exponential moving average (EMA) and 100-day EMA at $2.13 and $2.34, respectively.

Above this level, the price of WIF could rise to the neckline of the current chart pattern at $2.90, which would represent an 80% upside from the current price.

Meanwhile, the perpetual futures funding rate suggests that demand for leveraged long positions in WIF has surged over the past few days.

After falling into negative territory following the market sell-off on August 5, the perpetual funding rate for WIF has turned positive, according to data from Coinglass.

A positive financing rate indicates that longs (buyers) are looking to increase leverage, while the opposite occurs when shorts (sellers) need additional leverage, resulting in negative financing rates.

Average financing rate for WIF perpetual contracts over 8 hours. Source: Coinglass

It is worth noting that the current eight-hour rate of 0.0066% is equivalent to a seven-day cost of 0.13%, which is not significant for traders who are establishing futures positions. Usually, when excessive optimism leads to imbalances, the rate in the next few days can easily exceed 1% per week.