Will VIRTUAL Maintain Its 21% Gain as Active Users Reach 3.7K?

Virtuals Protocol [VIRTUAL], an AI-driven cryptocurrency, has surpassed expectations, overcoming projections of potential underperformance typically associated with the bubble phase. In a surprising turn, it has gained momentum following a recent rise of 21% in value.

Key Takeaways

VIRTUAL has surged by 21% in value, despite earlier losses, following strong community support.
Active users have reached 3,700, signifying increased engagement and adoption.
The protocol generated over $26,000 in revenue recently, boosting its price outlook.
Liquidity in the derivatives market has increased significantly, favoring buyers.
While there are risks associated with liquidation clusters, current market conditions favor long traders.

In summary, while VIRTUAL enjoys a favorable environment with rising user engagement and liquidity, caution is warranted due to potential risks in the market.

VIRTUAL rallies 21% as on-chain activity and inflows rise

After previously experiencing a 12% decline, VIRTUAL emerged as the leading cryptocurrency winner over the last day, buoyed by a community vote where over 86,000 out of 104,000 investors expressed optimism—representing around 83% of the voters. This enthusiastic shift is evident in both on-chain and off-chain activities.

User Growth and Revenue Fuel Price Movement

Investor engagement with VIRTUAL remains robust. Statistics from Artemis indicate a marked increase in user interaction and protocol revenue recently.

The number of active spot traders for VIRTUAL on decentralized exchanges has reached 3,700, a milestone not seen since December 19. This surge in trading volume signals a growing adoption of VIRTUAL, contributing to its price appreciation and improved revenue performance.

Virtual revenue Source: Artemis

According to DeFiLlama, the protocol generated over $26,000 in revenue in just one day—levels not seen since mid-December, when market sentiment was generally negative. This combined growth in user participation and revenue suggests an optimistic outlook that may pave the way for further price increases.

Continuing Factors Support Momentum

The derivatives market has also significantly influenced VIRTUAL's recent achievements, propelled by increasing liquidity from investors adopting long positions.

Market data reveals that liquidity surged by over $24.4 million in just one day, primarily linked to buy-side contracts.

Virtual open interest. Source: CoinGlass

CoinGlass data related to the Open-Interest-Weighted Funding Rate, which assesses market liquidity based on long and short positions, further supports this trend. A positive funding rate is typically indicative of buyer strength in the perpetual market. At the time of writing, this rate stood at 0.0055%, reflecting a mildly bullish environment.

In addition, the long-to-short ratio, which evaluates buy and sell volume, illustrates greater buying pressure, with more long contracts transacting than short ones.

Potential Risks Ahead

However, an analysis of liquidation clusters on the price chart highlights lingering downside risks.

Liquidation clusters can act as either support or resistance zones, typically displayed in green and yellow shades. Currently, a significant concentration of liquidity clusters exists below the prevailing market price, suggesting that downward pressure still dominates over upward momentum.

Virtual liquidation Source: CoinGlass

Nonetheless, the risk of a drastic decline seems limited, as the metrics indicate that short liquidations have outpaced long liquidations, offering a relative advantage to long traders. As of now, short liquidations amounted to $491,000 in contrast to $134,000 in long liquidations.