Virtual Protocol (VIRTUAL) took the cryptocurrency market by storm today with a notable surge of more than 50% in its price. However, the asset was unable to maintain these gains as investors who held the asset for the long term saw it as an opportune moment to sell off and unloaded a substantial portion, as CoinGlass reports.
What is causing the decline in VIRTUAL’s price?
Information on the movement of funds in and out of exchanges indicated that as VIRTUAL’s price surged, exchanges worldwide experienced a notable influx of $13.5 million. This marked the highest recorded influx since the token was introduced.
Analysts and experts interpret this influx as a sign of an impending sell-off, suggesting that large holders and investors transferred their assets from wallets to exchanges. Such substantial inflows have the potential to exert selling pressure, leading to a further decrease in the price, which VIRTUAL has already witnessed.
Consequently, the initial gains of the asset were significantly reduced, plummeting from 50% to 14% within a short span of time. At the current moment, VIRTUAL is hovering around $2.32. It is worth noting, however, that simultaneously, the asset also saw a notable 138% surge in trading volume, reaching $755 million.
Negative on-chain indicators
During this period of intense price fluctuations, day traders actively engaged in the market. Notably, VIRTUAL’s Open Interest (OI) spiked by 25%, indicating the establishment of new positions.
As of now, the main liquidation levels were $2.24 on the downside and $2.45 on the upside, with traders heavily leveraged at these points.
In the event of a shift in sentiment resulting in a price surge to $2.45, roughly $6.5 million worth of short positions would be liquidated. Conversely, if sentiment remains unchanged and exchanges continue to experience inflows, there is a high chance that the price could decline to $2.24, leading to the liquidation of long positions worth $3.72 million.
These on-chain metrics collectively indicate that bulls are currently displaying signs of exhaustion while bears are asserting dominance, hinting at a potential bearish signal.
Price movement of Virtual Protocol (VIRTUAL)
In addition to these on-chain indicators, CryptoCrypto’s technical analysis suggests that with the recent upward momentum, VIRTUAL reached its breakout target from the inverted head and shoulders pattern. Nonetheless, this upward movement was halted after the asset encountered strong resistance at $3, which is a significant selling zone.
Analysis of VIRTUAL’s four-hour chart indicates that since January 19, 2024, the asset has touched this level thrice, each time facing selling pressure and a notable decline in price.
Despite this, the prevailing market sentiment, in conjunction with recent activities by whales, investors, and traders, indicates that VIRTUAL may experience further price corrections in the near future.