Virtuals Protocol price suffers harsh reversal as it enters new distribution phase after 52,000% surge.
Virtuals (VIRTUAL) token retreated to $4.23 on Friday, down by almost 20% from its highest level this week, in line with our last prediction.
The token’s pullback coincided with a broader sell-off within its ecosystem. GAME by Virtuals (GAME), the largest player in the Virtuals Protocol ecosystem, plunged by over 25%, making it one of the top laggards.
Luna token also dropped by 12.5%, bringing its market cap to $130 million. Other ecosystem tokens, including Prefrontal Cortex, VaderAI, Olyn, and aixCB, each fell by over 20%.
Wyckoff Method explains the VIRTUAL price dips
VIRTUAL’s price likely crashed due to the Wyckoff principles, which explain how price action unfolds. According to Wyckoff, financial assets typically go through four stages. The first phase, accumulation, is characterized by weak price action. As the chart below shows, the VIRTUAL token remained in a tight range between May and November.
VIRTUAL then entered the markup phase, driven by demand outpacing supply and a growing Fear of Missing Out. This markup phase occurred over the last two months, fueling the token’s surge.
The coin is now entering the distribution phase, which will likely be followed by markdown. It has already formed a doji candlestick, a pattern characterized by a small body and long upper and lower shadows. This pattern typically suggests that an asset opened and closed at the same price, a common reversal indicator.
In the markdown phase, traders who bought during the FOMO period begin to exit their positions. In this case, the VIRTUAL price could drop to the next support level at $3.00, about 30% below the current level.
Virtuals Protocol is the market leader in AI agents
Despite the recent price drop, Virtuals Protocol remains a key player in the crypto industry, particularly in the fast-growing AI agent sector. First, the protocol has a circulating supply of 1 billion tokens, matching its maximum supply, meaning there are no future token unlocks. Instead, there’s a possibility that the network could introduce a token burn mechanism to reduce the circulating supply.
Second, Virtuals Protocol operates in a rapidly expanding industry. Estimates suggest that the AI agent market will grow from $5.29 billion in 2024 to $216 billion by 2035. If these projections hold, Virtuals Protocol is well-positioned to be a major player in the sector.
Furthermore, the protocol already has a thriving ecosystem. GAME by Virtuals has a market cap of over $245 million, while Luna and aixCB are valued at over $129 million and $492 million, respectively. This growing ecosystem indicates that Virtuals Protocol could continue gaining traction.
