Velvet [VELVET] declined as much as 37% during the trading session, marking a significant reversal for one of the market's leading recent gainers. According to reports from AMBCrypto, the token's sell-off resembled DeXe's 87% crash, as both tokens previously led the market's gainers before experiencing dramatic declines. Despite the sharp decline, Velvet retained a 367% gain over the past 90 days, indicating the recent drop represents a significant correction rather than a complete reversal of its recent performance.
Whale activity increased sharply during Velvet's decline, with CoinGlass's Whale vs Retail Delta climbing to 0.098, one of its highest readings this year. As reported by AMBCrypto, this positive reading confirmed elevated whale participation rather than proving that whales caused the sell-off. $32.33 million in perpetual-market capital exited during the past day, with net outflows reaching $1.55 million over the same period. Over 15 days, total leveraged outflows climbed to $516 million, while netflow reached approximately $16.1 million, weakening VELVET's derivatives market and leaving price support increasingly dependent on spot demand.
The Funding Rate fell to -0.0314%, indicating that short traders paid long traders to maintain their positions, reflecting stronger bearish positioning across Velvet's perpetual market. According to AMBCrypto, this negative reading was the last comparable Funding Rate decline, occurring on June 29th. Before that decline, positive Funding Rates showed that long positioning dominated the market, while afterwards, positive readings remained close to neutral, suggesting that bullish leverage had weakened considerably. If this pattern repeats, limited long positioning could reduce the likelihood of a leverage-driven recovery.
Spot investors appeared to accumulate VELVET during the price decline, with Spot Netflow falling to -$357,000, showing that exchange outflows exceeded inflows. As reported by AMBCrypto, negative Spot Netflow may indicate accumulation because tokens leaving exchanges become less immediately available for sale. Over seven days, Spot Netflow reached -$1.03 million, maintaining the pattern of net exchange outflows. Sustained spot demand could cushion VELVET's decline, although weak derivatives positioning may delay a broader recovery.
