VELVET has staged a powerful comeback, climbing 24% within a narrow window and catching bearish traders off-guard. This price action is primarily the result of a classic short squeeze, where the liquidation of short positions forced a rapid buy-back, creating a feedback loop that accelerated the upward trajectory. High trading volume combined with rising Open Interest (OI) suggests that this is not just a temporary spike, but a move backed by fresh capital inflow.
From a broader market perspective, this rally reflects a growing trend of liquidity rotating into high-potential altcoins as major assets consolidate. In the US, where regulatory clarity for DeFi remains a focal point for institutional investors, VELVET’s performance highlights the resilience of decentralized protocols despite macroeconomic headwinds. The surge in liquidations indicates that the market was previously over-leveraged to the downside, and the current squeeze is recalibrating sentiment toward a more bullish outlook.
Traders and investors should now keep a close watch on the $1.75 resistance zone. Flipping this level into support would likely confirm a medium-term trend reversal and open the door for a retest of yearly highs. However, the market remains susceptible to volatility; a failure to maintain momentum could lead to a 'long squeeze' if recent buyers are forced to exit their positions during a pull-back. Monitoring funding rates will be essential to gauge the sustainability of this breakout.