VELVET continued its remarkable price rally after breaking out of a prolonged consolidation range three days ago.
Since then, the altcoin has maintained a stronger upward trajectory. It cleared the $1 resistance level and flipped it into support.
VELVET jumped 54% to a six-week high of $1.12 before dropping sharply. At press time, it traded around $1.07, up 16% daily and 119% weekly. Additionally, the altcoin’s Trading Volume climbed 392% to $71 million, indicating strong market activity.
Are VELVET speculators chasing the rally?
As Velvet [VELVET] gained upside strength, speculators deployed more capital to chase the rally.
According to CoinGlass, Derivatives Volume surged 390% to $432 million. Meanwhile, Open Interest jumped 69% to $63 million.
With this increase, Open Interest reached a monthly high, indicating more capital entered new positions.
On top of that, buyers outpaced sellers across the Perpetuals market. Over the past day, Perps Buy Volume climbed to 19.25 million. Meanwhile, Perps Sell Volume reached 18.53 million.
The daily Perps Delta rose to 0.72 million, signaling aggressive buying among derivatives traders.
Meanwhile, VELVET’s Long/Short Ratio climbed above 1. Binance Top Traders primarily drove this increase, with their ratio reaching 1.3. A ratio above 1 indicated that most traders expected the rally to continue.
Will VELVET profit-taking trigger a pullback?
Unsurprisingly, VELVET’s rally encouraged holders who had been underwater to cash out.
On the 14th of August, Spot Netflow reached a monthly high of $725,000. It later dropped to $38,000 at press time.
Positive Spot Netflow indicated that more VELVET entered exchanges than left them. This movement suggested stronger selling activity across Spot markets. Historically, higher Spot selling pressure has weakened market momentum and triggered pullbacks.
Can VELVET sustain its rally?
For now, VELVET is experiencing strong upward momentum driven by speculative demand. As a result, the altcoin’s Relative Strength Index [RSI] climbed to 80 and entered the overbought zone.
This reading reflected a strong buyer presence. Sustained demand at similar levels could support further gains.
Therefore, if demand holds, VELVET could defend $1 and target $1.60, where its previous trend collapsed. However, speculative demand rarely sustains an uptrend alone. Fading demand and Spot selling could push VELVET below $1.
Final Summary
- VELVET gained 54% and reached a six-week high of $1.12.
- Open Interest jumped 69%, showing increased speculative demand for VELVET. Perps Buy Volume exceeded Perps Sell Volume as derivatives traders favored further upside.