On January 31st, Virtuals Protocol [VIRTUAL] experienced a significant drop of 37.2%. This sudden movement was swiftly reversed as Bitcoin [BTC] retreated from $106k to $99.4k at the latest update.
Recent data showing a high influx of VIRTUAL into exchanges hinted at an impending sell-off. The failure to break through the $2.5 resistance level, coupled with short liquidations above this threshold, set the stage for potential new lows.
Could a Positive Trend Emerge for VIRTUAL?
Analysis of the price action revealed a clear downtrend on the daily chart. This trend persisted through the latter part of January, with any bullish momentum from the 78.6% Fibonacci retracement level being promptly reversed.
Increased volatility over the past two weeks, along with substantial capital outflow from the market per the CMF, further underscored the bearish sentiment.
The formation of a shooting star candlestick pattern and a spike in trading volume on January 31st highlighted the dominance of bearish forces.
Following the breakdown of former support levels at $2.67 and $2.4, it became evident that VIRTUAL was likely headed towards lower price levels, with the $1.25 mark as the next significant target.
While the daily chart painted a bleak picture, data from lower timeframes hinted at a possible reversal in momentum. Open Interest started to rise in the recent hours, hinting at a potential shift.
Notably, a surge in spot CVD over the last 24 hours pointed towards an increase in spot demand.
Meanwhile, the Funding Rate, which had been negative, crossed into positive territory over the same period, suggesting a change in short-term sentiment.
Disclaimer: The views expressed here are based on personal opinion and do not constitute financial advice, investment advice, or any other form of recommendation.