Velvet (VELVET), one of the market’s leading gainers of recent times, has fallen sharply with the outflow of leveraged capital. The token fell as much as 37% on the day as bearish pressure intensified.
Sales looked like DeXe (DEXE) The 87% crash occurred after both tokens had previously led the market’s gainers.
Even after its decline, Velvet maintained its 367% gain over the past 90 days.
Are whales causing VELVET’s decline?
Whale activity increased sharply Velvet’s recent decline.
CoinGlass’s Whale vs Retail Delta rose to 0.098, one of the highest this year. However, the positive reading confirmed that whale participation was increasing, rather than proving that whales were causing the sales.
Meanwhile, last day, a permanent market capital of $32.33 million was withdrawn. During the same period, net outflows reached $1.55 million.
Total leveraged exits over the 15 days rose to $516 million, while Netflow reached approximately $16.1 million. This decline in leveraged capital has weakened VELVET’s derivatives market, leaving price support increasingly dependent on spot demand.
Why are short investors taking control?
The contraction of leveraged capital coincided with a sharp shift towards short positioning.
Funding Rate dropped to -0.0314%; This shows that short-term investors are paying long-term investors to protect their positions. This negative reading reflected the stronger bearish trend in Velvet’s persistent market.
The last comparable Funding Rate decrease occurred on June 29.
Before this decline, positive Funding Rates indicated that long positioning dominated the market.
Afterwards, positive readings remained close to neutral, indicating that bullish leverage had weakened significantly. If this pattern repeats, limited long positioning may reduce the likelihood of a leverage-driven recovery.
Can spot buyers stop the decline?
In contrast, spot investors were seen accumulating VELVET during the price decline. Spot Net Flows fell to -$357,000, indicating foreign exchange outflows exceeded inflows.
Negative Spot Net Flow may indicate accumulation because tokens leaving exchanges become less available for sale.
However, the measurement cannot verify that every withdrawal means a new purchase. Over seven days, Spot Netflow reached -$1.03 million, maintaining the net foreign exchange outflow pattern. Residual spot demand could cushion VELVET’s decline, but weak derivative positions could delay a broader recovery.
Final Summary
- VELVET fell 37% as leveraged exits and bearish derivative positioning weakened momentum.
- Spot accumulation has provided support but weak bullish leverage could constrain any immediate recovery.
