Ai16z, a popular Solana meme coin, bounced back on Friday after falling nearly 50% from its highest level this month.
The price of Ai16z rose to $1.6830, up 32% from its lowest level this week, bringing its market capitalization to more than $1.84 billion.
The token, the third largest Solana (SOL) meme coin, rose as data on the chain showed that some whales bought the recent dip. Nansen data indicates that a whale bought tokens worth more than $1.58 million on Friday, anticipating a rebound. That trader now has ai16z tokens valued at over $2.8 million.
Two other whales bought tokens worth more than $1 million, while ten more purchased coins valued at more than $500,000 during the same period. This activity suggests that these traders expect the meme currency to recover once the current selling phase ends.
However, more data shows that smart money investors have continued to download ai16z tokens in recent weeks. The number of smart money holders fell to less than 80, from 118 on December 25. Historically, changes in the behavior of smart money are often reliable indicators of an impending price decline.
Meanwhile, some of the most profitable ai16z traders have started taking profits. The second and third most profitable traders sold almost all of their tokens, making $39 million and $20 million in profits, respectively. The most profitable trader ai16z also sold tokens worth $8.8 million and has an unrealized profit of $30 million.
Is the ai16z price bouncing a dead cat?
The ongoing ai16z price recovery could be a dead cat bounce – a situation where an asset in a downtrend briefly recovers before resuming its decline.
The token returned to the critical level at $1.7177 on the four-hour chart. This is an important point, as it was the neck of the double top model at $2.35. A double-top pattern is a well-known bearish indicator, while a break-and-retest formation often signals a continuation of the trend.
Also, the ai16z price has fallen below the 50-period moving average. Therefore, unless the token breaks above the 50-period moving average at $1.7490, there is a risk of a continued downtrend. If this recovery proves to be a dead cat bounce, the next level to watch will be this week’s low of $1.2663.
