The Virtuals Protocol token has suffered a big reversal this week, joining other cryptocurrencies in a strong sell-off. VIRTUAL has dropped in the last four consecutive days and is down by over 30% from its all-time high.
Its recent crash aligns with our Virtuals Protocol prediction as it continued its strong rally and moved to a record high. It has also happened as the crypto fear and greed index moved from the greed zone of 62 to the neutral point of 55. The altcoin season index has also dropped sharply in the past few days.
VIRTUAL price rebound is supported by technicals
Still, there are rising chances that this AI agent token will bounce back soon as investors buy the dip. The first main reason is that the token has formed a hammer candlestick pattern. This pattern forms during a downtrend, characterized by a long lower shadow and a small body. It often does not have an upper shadow. This candlestick pattern is often a good reversal sign.
Second, there are signs that the VIRTUAL price has formed the mean reversion formation. Mean reversion is when an asset that has deviated from its historical averages drops aligns with them and then resumes the uptrend. In this case, the token has retested the 25-day moving average, a possible sign that it will bounce back.
Further, as the chart below shows, the price started dropping when it rose to the psychological point of $5. Financial assets often drop moderately after hitting a major psychological level. The recent Bitcoin price crash happened after it crossed the key point of $108,000.
Virtuals Protocol is growing
The other main reason the VIRTUAL price may rebound is that it is in a market segment that is seeing strong growth. Artificial intelligence (AI) agents are expected to be a big market in the future as they will help companies save costs and automate many tasks. One estimate is that the industry will have a compounded annual growth rate (CAGR) of 45% in the next five years.
Virtuals Protocol has a growing ecosystem of hundreds of assets. For example, G.A.M.E has a market cap of over $239 million, while aixbt is valued at over $418 million. The other notable players in the ecosystem are Luna, Iona, Sekoia, and aixCB. The developers also partnered with Avarik Saga, a top gaming publisher, to expand its ecosystem.
Further, there are signs that cryptocurrencies are still in a strong bullish trend, as Bitcoin has formed a bullish pennant pattern on the weekly chart. That is a sign that the recovery will continue, pushing more altcoins like VIRTUAL higher.
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