Velvet (VELVET) fell 75% last week. Losses continue as downward pressure intensifies. At the time of writing, the asset had fallen another 16% in the last 24 hours under the same selling pressure.
An interesting dynamic underlying the decline is that traders in both the spot and futures markets are taking buy-side positions and committing capital against the current trend for Velvet.
Velvet buckles are under increasing sales pressure
Velvet absorbing heavier selling pressure and bearish sentiment, a noticeable change in the asset’s trading volume and a declining capital base in its permanent market.
The Buyers Put Ratio, which measures long trading volume against short trading volume in the continuous market, has skewed towards the sell side, with the reading falling to 0.95 as of writing.
A ratio below 1 indicates that sellers dominate volume across multiple accounts. However, the sales volume is not too exaggerated because the figure is only slightly below the 1 mark on the chart. This sale coincided with Velvet’s shrinking capital base in the permanent market, as investors withdrew funds due to concerns about high volatility.
CoinGlass data showed that open interest, which constantly tracks capital movements in the market, fell 28% over the period, from $29.36 million to $21.07 million.
Investors remained net long throughout the sell-off
The interesting part of this picture is that trader positioning remains a net long despite increased sales volume and capital tightening. The Funding Rate, which indicates whether market positioning benefits buyers in long trades or sellers in short trades, gave a reading of 0.0050%.
A positive reading, as in this case and very slightly, indicates that investors are still in net position well ahead of an upward move.
However, looking at a longer horizon, Velvet has reason to be bullish as it is up 59% in the last thirty days and is up 533% in the quarter, nearly ten times the monthly figure.
However, given that long positions have lost more than short positions with the last 24 hours as a reference, short-term conviction is still questionable.
Total liquidations reached $558,320 during this period, with long liquidations making up the majority at $490,520; this outcome made Velvet more profitable than shorting.
Spot buyers accumulate through decline
Spot investors continue to reinforce the broader market narrative purchasing activity escalates.
At the time of analysis, total purchases by spot investors reached $1.58 million this week alone. Almost half of that came in the last 48 hours, supporting the $781,000 Velvet buy side on netflow.
When netflow confirms that net buying is stronger in the spot market, this often leads investors to view the recent decline as a discount and accumulation opportunity. A continuation of this buying trend will provide Velvet with a solid foundation for recovery in the near term.
Final Summary
- Velvet fell 75% last week and another 16% in a day as traders pulled money out of the market as sales surged.
- Spot buyers put $1.58 million into Velvet this week and believe the low price is a chance to buy before a possible rebound.
