In a shocking turn of events, a crypto trader faced a significant financial setback while purchasing the Solana meme coin, Dogwifhat (WIF). The trader, who remains anonymous, invested nearly $9 million in WIF. However, due to the low liquidity levels of the token and the workings of decentralized exchanges, the trader ended up with grossly inflated prices.
Someone actually did this an hour ago:
– Bought $8.8M worth of $WIF in 3 transactions
– It is currently worth $3.1M
Sitting at an Unrealized Loss of $5.7M
— Gumshoe (@0xGumshoe) January 10, 2024
The purchases were carried out over three transactions, valued at $6.25 million, $1.78 million, and $893,000. The large orders on the relatively modest Dogwifhat trading pool caused the price to surge from about fifteen cents to as high as three dollars per token.
However, the buying spree was short-lived. As soon as the trader filled their order, the price rapidly fell back to the pre-pump price of around 15 cents. This resulted in the trader holding a substantial amount of Dogwifhat, which was valued at roughly one-fifth of the original price.
The trader acquired WIF at a peak price of $3 due to an immediate surge in the market. However, the market quickly corrected itself and the value of WIF plummeted to 15 cents, which was nearly the initial price before the purchase. This rapid fluctuation resulted in a slippage loss exceeding $5.7 million for the trader.
Was the Trade a Publicity Stunt to Boost Dogwifhat’s Popularity?
It’s important to note that ‘slippage’ is a term used in trading to describe the discrepancy between the anticipated price of a trade and the price at which the trade is executed.
Certain market watchers have speculated that the trade could be a potential “publicity maneuver” designed to spotlight WIF, especially as its prices have been declining in recent weeks. The trading volume of Dogwifhat surpassed $35 million on Decentralized Exchanges (DEXs) in the last 24 hours, and its market capitalization skyrocketed to $200 million. Despite the steep $9 million slippage trade this week, it underscored the enduring buzz around Dogwifhat, albeit at a significant cost.
The considerable attention it garnered resulted in a unique opportunity for initial investors. Some managed to transform an investment of $1,000 in SOL into a fortune worth millions as the prices experienced a rapid and unexpected surge.
For everyday investors, this serves as a costly cautionary tale about the inherent risks associated with trading in memecoins. The incident underscores the volatility of the crypto market and the potential risks associated with trading in low-liquidity pools.