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Investment Fumble: Trader Acquires $9M Worth of Solana's Dogwifhat Meme Coin, Faces Over 60% Loss Due to Slippage

Jan 11, 2024 at 11:02 am

Recent market activity surrounding the meme coin "dogwifhat" (WIF) on the Solana blockchain has triggered speculation among analysts. Some believe that a sizable trade, involving an expenditure of nearly $9 million, may have been orchestrated as a deliberate "marketing stunt" to draw attention to WIF amid its recent price downturn.

On Thursday, an enthusiastic buyer, possibly a trader with a fat-finger mistake, engaged in a bold move by investing substantial funds in WIF. This meme coin had gained significant popularity on Solana, delivering considerable profits to early investors during the month of December.

The buyer executed the transaction through three separate transactions, amounting to $6.25 million, $1.78 million, and $893,000. Blockchain data linked to the Solana wallet address "5qYuZ9ZLShLB1MuV83xHRcTgVA9A5pUajnQUUcPbk3bf" revealed the details of these transactions.

However, the decision to execute such a substantial trade in a relatively low-liquidity pool proved to be a financial disaster. The buyer ended up acquiring WIF at a peak price of $3, triggered by an immediate surge in prices characteristic of decentralized exchanges. Subsequently, prices sharply declined back to 15 cents, nearly the level before the purchases, resulting in a slippage loss exceeding $5.7 million.

In financial terms, slippage represents the difference between the expected and actual trade prices during execution.

Observers have characterized this trade as a potential "marketing stunt," suggesting that its purpose was to garner attention for WIF amid its recent struggles in pricing.

Despite the challenges, WIF has seen a 50% surge in the past 24 hours, attributed to heightened buying pressure, according to data from DEXScreener. Trading on decentralized exchanges alone amounted to $35 million, contributing to WIF's market capitalization exceeding $200 million.

WIF has emerged as one of the notable success stories in the recent Solana ecosystem, alongside tokens like bonk (BONK), during the meme coin frenzy that swept through the blockchain in December. The intense hype surrounding WIF transformed it into a quasi-lottery for early investors, with some experiencing substantial gains by turning $1,000 worth of SOL into millions, driven by the sudden and unexpected surge in prices.

Read More: Solana's SOL Retreats Below $100, Trails Behind BNB in Latest Crypto Rankings

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