Analyzing if VIRTUAL can recover from its 20% weekly drop

Key Takeaways

Sustained selling pressure in the derivatives market and outflows from DeFi platforms have dragged down VIRTUAL’s performance. Major crypto entities have moved large amounts of VIRTUAL, continuing to acquire the asset despite ongoing market weakness.

Virtual Protocol [VIRTUAL] remains in a downward trend, with the price sinking over 20% in the past week alone. This sustained decline underscores the token’s broader market struggles.

Market analysis suggests that the downturn may not be over, as more bearish indicators continue to emerge.

Interestingly, AMBCrypto observed that the movements by large entities are not necessarily aligned with broader market sentiment, meaning their accumulation may have a different underlying motive.

Liquidity drop rattles VIRTUAL

VIRTUAL saw a sharp decline in the past 24 hours, driven by significant liquidity outflows from the derivatives market.

Open Interest data shows that closed contracts totaled $9.48 million, as Open Interest fell 5.51% to $172.21 million, at press time.

Although total liquidations over the past day stood at around $564,000, traders voluntarily withdrew nearly $8.9 million from the market, reflecting uncertainty about VIRTUAL’s next move.

Source: CoinGlass

The Open Interest Weighted Funding Rate also reflected the weakening sentiment, dropping to 0.0001%—approaching the zero mark.

If the rate enters negative territory, it would indicate a market skewed heavily toward sellers, with short positions dominating open contracts.

Memecoin and DeFi weakness weigh on VIRTUAL

The broader memecoin market has also underperformed over the past seven days, contributing to VIRTUAL’s slump.

According to Artemis, the memecoin sector dropped 2.8% into negative territory during this period, a key factor behind VIRTUAL’s recent decline.

Source: Artemis

Monthly, memecoins remain up by 33%, but VIRTUAL has fallen 3.45%, highlighting the impact of the most recent correction.

DeFi-related factors also played a role. Spot volume on decentralized exchanges (DEXs) fell significantly, pointing to weakening trading activity.

Currently, spot DEX volume has plunged from over $6.5 million to just $650,000 in the past week, indicating a major drop in market momentum.

This level of volume decline suggests that traders are exiting positions, likely having sold their tokens during the broader market pullback.

Large entities accumulate VIRTUAL

Data from Entity Balance Changes indicates that large exchanges have increased their VIRTUAL holdings in recent days.

According to Arkham Intelligence, $67 million worth of VIRTUAL has been added to the market from top exchanges such as Binance and Bybit.

Source: Arkham Intelligence

It remains unclear whether this reflects portfolio additions or an increase in exchange reserves.

If it’s the former, it may signal bullish sentiment and the possibility of a supply squeeze driven by accumulation. If it’s the latter, it could foreshadow a major sell-off, deepening the bearish mood in the market.