Virtuals Protocol [VIRTUAL] joined the day’s top gainers on the 5th of October, surging 11% at its peak. The market appeared to favor the bulls’ directional conviction.
Still, falling protocol activity raised concerns about whether the asset could sustain this run. Traders were backing the rally, while fewer users were engaging with the protocol.
Are VIRTUAL’s perpetual traders backing the rally?
The bullish setup drew support from different segments, including the perpetual Futures market.
VIRTUAL’s perpetual contracts recorded roughly $49.24 million in capital inflows over 24 hours, with Netflow at $2.3 million. Positive Netflow suggested that more capital entered than exited.
However, this alone did not establish whether traders favored longs or shorts.
The Funding Rate offered a clearer clue. Its positive reading of 0.0056% indicated that longs were paying shorts, consistent with bullish positioning.
Meanwhile, Open Interest reached $133.26 million, up 25% from the previous day. That increase showed greater participation in outstanding contracts.
Alongside positive Funding Rates, it supported the bullish reading, although additional leverage could amplify reversals. The conviction also extended beyond derivatives.
Could VIRTUAL staking ease selling pressure?
Staking activity across Virtuals Protocol also gained ground, according to DeFiLlama. The dollar value of staked capital reached roughly $18.79 million, up from a low of $13.05 million.
Staking allows holders to pursue rewards while keeping tokens committed to the protocol.
If more VIRTUAL tokens enter staking, fewer could remain immediately available for selling. However, rising dollar-denominated staking value can also reflect token appreciation. The increase alone did not establish how many additional tokens were staked. Even with that support, protocol usage told a weaker story.
Why is VIRTUAL’s falling activity a risk?
Declining Daily Active Users (DAU) and Revenue remained risks to VIRTUAL’s rally.
According to Artemis, Daily Active Users fell from 4,000 to around 1,500 at press time. That left fewer users interacting with the protocol while market participation expanded.
Revenue also dropped to roughly $3,800, down from $45,400 on the 29th of September.
Together, these declines weakened the case that stronger protocol usage was supporting VIRTUAL’s price gains. For now, positive Funding Rates and rising Open Interest suggested traders retained bullish conviction.
Whether that conviction lasts could depend partly on users returning and Revenue recovering. Otherwise, the rally could remain vulnerable when trading appetite cools.
Final Summary
- VIRTUAL gained up to 11%, alongside rising Open Interest, positive Funding Rates, and higher dollar-denominated staking value.
- Falling Daily Active Users and Revenue left the rally dependent on market conviction while protocol activity weakened.