Velvet cryptocurrency has experienced a dramatic decline, losing three-quarters of its value within the past week. The selling momentum intensified recently, with the asset dropping a further 16% in just 24 hours, reflecting heightened bearish sentiment.
Market data reveals a clear dominance of sellers across both spot and perpetual trading markets. The Taker Buy/Sell Ratio, which compares buying volume to selling volume in the perpetual market, has slipped below 1 to around 0.95, indicating that sell orders currently surpass buying activity. This shift is accompanied by a significant reduction in open interest, where capital committed in perpetual contracts dropped approximately 28%, from over $29 million to just above $21 million. These trends suggest investors are withdrawing funds, possibly wary of Velvet’s high volatility.
However, amid the downturn, an intriguing pattern emerges: many traders maintain net long positions despite the growing sell volume. The Funding Rate, a metric signaling whether longs or shorts dominate market sentiment, remains slightly positive at 0.0050%, implying that buyers still expect an upward price correction. This optimism is supported by Velvet’s strong recent performance, having gained nearly 60% in the last month and an impressive 533% over the past quarter.
Short-term dynamics present a more complex picture, though. Long positions have suffered greater liquidations in the past day, accounting for the majority of $558,320 total liquidations, making short trades currently more profitable. This sharp divergence between short-term losses for longs and longer-term gains underscores the uncertainty facing Velvet traders.
Spot market investors have responded to the price slump by increasing buying activity. Over the past week, spot purchases reached approximately $1.58 million, with nearly half of that occurring in the last 48 hours alone. This influx of buying interest at lower prices suggests that many investors view the recent decline as an opportunity to accumulate Velvet at a discount, potentially laying the groundwork for a future recovery.