is this a dead cat bounce?

Ai16z, a popular Solana meme coin, rebounded on Friday after falling almost 50% from this month’s high.

Ai16z price rose 32% from this week’s low to $1.6830, pushing its market cap to over $1.84 billion.

The token, the third-largest Solana (SOL) meme coin, rose as on-chain data showed some whales bought the recent dip. Nansen data shows that a whale bought over $1.58 million worth of tokens on Friday, expecting a return. This trader currently holds over $2.8 million worth of ai16z tokens.

Two other whales purchased more than $1 million worth of tokens during the same period, while ten more purchased more than $500,000 worth of tokens. This activity suggests that these investors expect the meme coin to rebound once the current selling phase ends.

But more data shows that smart money investors have continued to dump ai16z tokens in recent weeks. The number of smart money holders fell from 118 to less than 80 on December 25. Historically, changes in smart money behavior have often been reliable indicators of impending price decline.

ai16z smart money investors | Source: Nansen

Meanwhile, some of the most profitable ai16z investors have started to turn a profit. The second and third most profitable investors sold almost all of their tokens, making a profit of $39 million and $20 million, respectively. The most profitable ai16z investor also sold $8.8 million worth of tokens, making an unrealized profit of $30 million.

Solana meme coin ai16z profit leaders | Source: Nansen Is the recovery in ai16z price a dead cat bounce? Ai16z chart | source: crypto.news

The ongoing ai16z price recovery may be a dead bounce, a situation where an asset in a downtrend recovers briefly before resuming its decline.

The token retested the critical level of $1.7177 on the four-hour chart. This is an important point because it was the neckline of the $2.35 double top formation. The double top pattern is a well-known bearish indicator; A breakout and retest formation usually indicates that the trend continues.

Additionally, ai16z price fell below the 50-period moving average. Therefore, unless the token breaks above the 50-period moving average of $1.7490, there is a risk that the downtrend will continue. If this recovery proves to be a dead cat bounce, the next level to watch will be this week’s low at $1.2663.