Velvet (VELVET) became one of the market’s biggest losers over the past day, sliding about 18% during the session as sellers took control.
Despite the recent pullback, Velvet has retained its position as one of the market’s strongest gainers over the past couple of months.
In the last 90 days alone, the token has surpassed every asset in the top 100 by market capitalization, posting a 571% gain that outpaced the next best performer, Audiera (BEAT), which surged 530% in the same period.
Leveraged Capital Leaves Velvet Futures Market
One of the biggest concerns now weighing on Velvet is the capital exodus sweeping through its market. The token’s perpetual futures market is showing larger outflows than inflows, a sign that money is moving out rather than in.
Capital flight from a market generally indicates that investors are withdrawing their funds, a decision that often reflects bearish sentiment. About $24 million has been withdrawn from the perpetual market over the past two weeks, indicating that investors are heading for the exit.
Rising prices generally breed confidence and attract new capital into a market. Yet Velvet found the opposite, with profit-taking and capital flight dominating flows and underscoring the prevailing sentiment.
Investors in the spot market failed to follow suit, purchasing relatively little VELVET during the same window. The chart shows a total net cash flow of approximately $847,000.
Spot purchases of this magnitude rarely fuel a rally on their own, leaving little chance of the price moving in a significant upward direction.
Why Velvet’s Decline Isn’t Bear Control
On the surface, Velvet’s fall and withdrawal of capital from its perpetual market looks like bearish dominance, but the data underneath tells a more nuanced story.
Chart data shows that even as capital outflows increased over the past two weeks, Velvet Perpetual Market traders clung to a bullish outlook.
Funding rate data, which reveals which side of the market is in control based on who pays the funding fees, shows that long positions remained in charge.
Despite the $2.17 million net outflow recorded over the past 24 hours, the funding rate reached 0.0044%, suggesting that the market’s perpetual balance of $27.87 million is still largely based on long positions.
One side, long or short, usually takes command when a strong belief develops that the price will rise in the near and near term.
In this case, the feeling is that Velvet’s decline looks more like consolidation and capital management on the part of traders who have reaped massive gains.
This crashes on a key support level
Graphical analysis places Velvet at a single key level of organizing a rebound or extending her slide.
This reading stems from a price trade on an ascending support line that has generated bounces repeatedly, at least three times so far.
A breakout from this level could send Velvet falling once again towards $0.45, where a key demand area is and could serve as a rebound catalyst.
If the ascending support holds, Velvet’s rebound could already be taking shape. The support level remains the decisive area of the chart to watch for the next move.
Final summary
- Velvet fell about 18% in a single day, but it remains one of the market’s best performers over the past three months, gaining 571% in 90 days and beating every other token in the top 100.
- $24 million left the perpetual market in 2 weeks, but long positions still control the balance.
