VELVET’s 35% rally leaves buyers in control — For how long?

VELVET’s price surged by 35.34% as explosive spot and derivatives activity fueled stronger participation. All while rapidly rising leverage reshaped the rally’s risk profile.  

After the uptick in trading volume, the altcoin hit $0.5860 on the charts. Spot volume rose by approximately 1,030.09% while derivatives volume soared by 5,311.17%. 

Such a significant hike put trading activity squarely behind the latest price gains. Importantly, the volume of derivatives grew at a higher rate than that of spot activity, hinting at more speculative activity. 

There has also been a significant hike in spot participation though. This has kept the rally away from all leveraged trading.

The overall volume expansion thus provided VELVET a wider base of support in its progress.

Rising leverage adds fuel and fragility

The Open Interest rose by 65.81% to $39.07 million as market participants took on more derivatives positions. However, the hike in Open Interest remained far below the 5,311.17% derivatives volume expansion. Such a divergence hinted at exceptionally high turnover compared to the outstanding value of active positions.

In fact, traders appeared to rotate positions aggressively as VELVET attracted heightened speculative attention.

The 65.81% hike still carried important implications for the rally’s durability though. The rising Open Interest provided extra participation with higher price load, but also increased leveraged exposure.

A sudden turn of events in prices may thus lead to quicker rebalancing on the derivatives market.

Top traders maintain the bullish momentum

Binance top traders maintained a clear long bias while VELVET’s trading activity expanded. Long positions accounted for 60.76%, compared to the 39.24% held by the shorts.

Their Long/Short Ratio stood at 1.55, leaving bullish exposure comfortably ahead of bearish positioning. This imbalance seemed to reinforce the rally’s direction of support from Binance’s biggest traders. 

Furthermore, the long dominance aligned with VELVET’s 35.34% price hike and rapidly expanding Open Interest. 

However, with an upswing in leverage, there was also a strong bullish build-up. A sudden rejection could pressure crowded long positions and intensify volatility through forced position reductions.

The bullish imbalance might get easily shattered if trading volume slows down significantly following the explosive growth.

Can VELVET challenge $0.8923 next?

VELVET’s latest daily candle climbed as high as $0.6482, before settling around $0.6027 at press time. Buyers thus took the price decisively past the established $0.4337-support area.

The uptick also brought into focus the significant $0.8923 resistance. That level previously capped an August upside spike, with the same now representing the clearest recovery barrier.

The MACD structure also strengthened during the most recent bull market advance. The buying pressure picked up, with its histogram moving into positive zone near the 0.0236-level. 

On the other hand, the MACD line broke above the signal line, providing some technical support to the breakout attempt.

A sustained volume expansion could carry VELVET deeper towards $0.8923. However, a move below $0.4337 would seriously damage the recovery framework and bring the lower $0.2459-support into play.

Final Summary

• Explosive trading volumes strengthened VELVET’s rally as market participation expanded sharply.

• Rising leverage supports bullish positioning but increases reversal risks around stronger resistance.