Velvet (VELVET) stock has emerged as one of the market’s biggest losers over the past day, falling nearly 18% during the session with sellers in control.
Despite the recent decline, Velvet has maintained its position as one of the market’s strongest gainers over the past two months.
Over the past 90 days alone, the token has outpaced every asset in the top 100 assets by market cap, posting a 571% gain outpacing the second best performer, listen (house)which rose 530% over the same stretch.
The leveraged capital exits the Velvet futures market
One of the major concerns weighing on Velvet now is the capital drain spreading across its market. The token’s perpetual futures market is showing heavier outflows than inflows, which is a sign that money is leaving rather than entering.
Draining capital from the market usually indicates that investors are withdrawing their money, a move that often reflects bearish sentiment. Nearly $24 million has flowed out of the perpetual market over the past two weeks, indicating investors are headed for the exit.
Rising prices usually generate confidence and attract new capital into the market, but Velvet saw the opposite, as profit-taking and capital flight dominated flows, underscoring the prevailing sentiment.
Spot market investors failed to keep up, buying relatively small quantities velvet Above the same window. The chart shows a total net spot inflow of about $847,000.
Spot buying of this size rarely fuels a rally on its own, leaving little chance for the price to make a meaningful move to the upside.
Why is Velvet’s pullback not considered bearish control?
On the surface, Velvet’s decline and capital decline from its perpetual market looks like bearish dominance, however the data below tells a more nuanced story.
Chart data shows that even as capital outflows have mounted over the past two weeks, traders in the perpetual Velvet market have clung to bullish expectations.
Funding rate data, which reveals which side of the market controls the market based on who pays the financing fees, shows that longs have remained in control.
Despite the net outflow of $2.17 million recorded over the past 24 hours, the funding rate reached 0.0044%, indicating that the perpetual market balance of $27.87 million is still largely in long positions.
One side, whether long or short, usually takes control when a strong belief has built up that the price will swing higher in the short to near term.
In this case, sentiment suggests that Velvet’s decline looks more like consolidation and capital management than traders who have made massive gains.
this Hanging on one major support level
Chart analysis places Velvet one key level apart from regulating a bounce or slide expansion.
This reading stems from the price trading to a rising support line that has led to bounces on multiple occasions, at least three times so far.
A breakout from this level could see Velvet pull back towards $0.45, where there is a key demand zone and could act as a catalyst for a bounce.
If bullish support holds instead, a Velvet recovery may have already begun to take shape. The support level remains the crucial area on the chart to monitor the next move.
Final summary
- Velvet fell in value by almost 18% in a single day, but it is still one of the best performing coins on the market over the past three months, rising 571% in 90 days and beating all other top 100 tokens.
- $24 million has left the standing market over the course of two weeks, yet longs still control the balance.
