Velvet [VELVET] has fallen 75% over the past week, with losses continuing as bearish pressure intensifies. At press time, the asset had dropped another 16% in the last 24 hours under the same selling pressure.
The intriguing dynamic beneath the decline is that traders across both the spot and perpetual markets are holding buy-side positions, committing capital against the current tide for Velvet.
Velvet buckles under mounting sell pressure
Velvet is absorbing heavier selling pressure and bearish sentiment, a shift visible in the asset’s trading volume and the shrinking capital base across its perpetual market.
The Taker Buy Sell Ratio, which measures long trading volume against short trading volume in the perpetual market, has tilted toward the sell side as the reading slips to 0.95 as of writing.
A ratio below 1 signals that sellers are dominating volume across multiple accounts. The sell volume isn’t heavily exaggerated, though, since the figure sits only slightly beneath the 1 mark on the chart. That selling has coincided with a contracting capital base for Velvet in the perpetual market, as investors withdraw funds over concerns about high volatility.
CoinGlass data showed that Open interest, which tracks capital movement in the perpetual market, plunged from $29.36 million to $21.07 million, a 28% decline across the period.
Traders hold net long through the sell-off
The compelling part of this picture is that trader positioning remains net long despite the rising sell volume and the capital contraction. The Funding Rate, which reflects whether market positioning favors buyers through long trades or sellers through short trades, printed a reading of 0.0050%.
A positive reading, as in this case and only mildly so, indicates that traders are still positioned net long ahead of an upward move ahead.
However, over a longer horizon, they have reason for conviction in an upswing, as Velvet has surged 59% over the past thirty days and climbed 533% across a quarter, nearly ten times the monthly figure.
The short-term conviction stays questionable, though, since longs have lost more than shorts, with the past 24 hours as the reference.
Total liquidations reached $558,320 over that stretch, and long liquidations constituted the majority at $490,520, an outcome that has made shorting Velvet more profitable than going long.
Spot buyers accumulate through the decline
Spot investors keep reinforcing the broader market narrative as their buying activity climbs.
At the time of analysis, total purchases from spot investors reached $1.58 million this week alone. Nearly half of that has arrived in the past 48 hours, with $781,000 worth of Velvet in netflow backing the buy side.
When netflow confirms stronger net buying in the spot market, it often suggests investors view the recent decline as a discount and an opportunity to accumulate. A continuation of this buying trend would hand Velvet a solid base for a rebound in the near term.
Final Summary
- Velvet has dropped 75% over the past week and another 16% in a day, with traders pulling money out of the market as selling picks up.
- Spot buyers have put $1.58 million into Velvet this week, betting the lower price is a chance to buy in before a possible recovery.
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