diff --git a/compiler/src/dotty/tools/dotc/transform/FirstTransform.scala b/compiler/src/dotty/tools/dotc/transform/FirstTransform.scala
index 971aa33f3163..27f505c21df9 100644
--- a/compiler/src/dotty/tools/dotc/transform/FirstTransform.scala
+++ b/compiler/src/dotty/tools/dotc/transform/FirstTransform.scala
@@ -144,7 +144,16 @@ class FirstTransform extends MiniPhase with InfoTransformer { thisPhase =>
   }
 
   override def transformIdent(tree: Ident)(implicit ctx: Context): Tree =
-    if (tree.isType) toTypeTree(tree) else constToLiteral(tree)
+    if (tree.isType) {
+      toTypeTree(tree)
+    } else if (tree.name != nme.WILDCARD) {
+      // We constant-fold all idents except wildcards.
+      // AFAIK, constant-foldable wildcard idents can only occur in patterns, for instance as `case _: "a"`.
+      // Constant-folding that would result in `case "a": "a"`, which changes the meaning of the pattern.
+      // Note that we _do_ want to constant-fold idents in patterns that _aren't_ wildcards -
+      // for example, @switch annotation needs to see inlined literals and not indirect references.
+      constToLiteral(tree)
+    } else tree
 
   override def transformSelect(tree: Select)(implicit ctx: Context): Tree =
     if (tree.isType) toTypeTree(tree) else constToLiteral(tree)
@@ -156,7 +165,9 @@ class FirstTransform extends MiniPhase with InfoTransformer { thisPhase =>
     constToLiteral(foldCondition(tree))
 
   override def transformTyped(tree: Typed)(implicit ctx: Context): Tree =
-    constToLiteral(tree)
+    // Singleton type cases (such as `case _: "a"`) are constant-foldable.
+    // We avoid constant-folding those as doing so would change the meaning of the pattern (see transformIdent).
+    if (!ctx.mode.is(Mode.Pattern)) constToLiteral(tree) else tree
 
   override def transformBlock(tree: Block)(implicit ctx: Context): Tree =
     constToLiteral(tree)
diff --git a/tests/run/i6996.check b/tests/run/i6996.check
new file mode 100644
index 000000000000..a4387987de57
--- /dev/null
+++ b/tests/run/i6996.check
@@ -0,0 +1,3 @@
+an `a`
+false
+not `a`
diff --git a/tests/run/i6996.scala b/tests/run/i6996.scala
new file mode 100644
index 000000000000..9314727c5437
--- /dev/null
+++ b/tests/run/i6996.scala
@@ -0,0 +1,14 @@
+object Test {
+
+  def isAType(arg: String): Unit = arg match {    
+    case _ : "a" => println("an `a`")
+    case _ => println("not `a`")
+  }
+
+  def main(args: Array[String]): Unit = {
+    isAType("a")
+    println(new String("a").isInstanceOf["a"])
+    isAType(new String("a"))
+  }
+
+}