The popular Solana meme coin, Ai16z, experienced a recovery on Friday after a nearly 50% crash from its highest point this month.
The price of Ai16z rose to $1.6830, marking a 32% increase from its lowest point this week and bringing its market capitalization to over $1.84 billion.
As per on-chain data, the token, which is the third-largest Solana meme coin, saw an increase in value due to some whales buying during the recent dip. Nansen data reveals that one whale bought tokens worth more than $1.58 million on Friday, anticipating a bounce back. This trader now holds Ai16z tokens valued at over $2.8 million.
Two other whales purchased tokens worth over $1 million, while ten others acquired coins valued at over $500,000 during the same period. This activity suggests that these traders expect the meme coin to recover once the current selling phase ends.
However, further data indicates that smart money investors have been consistently offloading Ai16z tokens in recent weeks. The number of smart money holders has decreased to below 80, down from 118 on December 25. Historically, changes in smart money behavior have often been reliable indicators of an impending price decline.
Meanwhile, some of the most profitable Ai16z traders have begun taking profits. The second and third most profitable traders have sold almost all of their tokens, making profits of $39 million and $20 million, respectively. The most profitable Ai16z trader has also sold tokens worth $8.8 million and currently holds an unrealized profit of $30 million.
Now the question arises: Is the rebound in Ai16z price just a dead cat bounce?
The ongoing rebound in Ai16z price could be classified as a dead cat bounce, which refers to a situation where an asset briefly recovers from a downtrend before resuming its decline.
On the four-hour chart, the token has retested the critical level at $1.7177, which was the neckline of the double-top pattern at $2.35. A double-top pattern is a well-known bearish indicator, and a break-and-retest formation often suggests a continuation of the trend.
Furthermore, the Ai16z price has fallen below the 50-period moving average. Unless the token breaks above the 50-period moving average at $1.7490, there is a risk of a continued downtrend. If this rebound turns out to be a dead cat bounce, the next level to monitor will be the low of $1.2663 seen earlier this week.