is this the end of Virtuals Protocol rally?

Virtuals Protocol price experienced a sharp reversal as it entered the new distribution phase after a 52,000% increase.

Virtuals (VIRTUAL) token fell almost 20% from this week’s high to $4.23 on Friday, in line with our last forecast.

The token’s withdrawal coincided with a broader sell-off across its ecosystem. GAME by Virtuals (GAME), the largest player in the Virtuals Protocol ecosystem, was one of the furthest laggards, falling over 25%.

The Luna token also fell by 12.5%, increasing its market value to $130 million. Other ecosystem tokens, including Prefrontal Cortex, VaderAI, Olyn, and aixCB, are down over 20% each.

The Wyckoff Method explains VIRTUAL price declines

VIRTUAL’s price dropped probably due to Wyckoff principles explaining how price movement occurs. According to Wyckoff, financial assets generally go through four stages. The first phase, accumulation, is characterized by weak price movement. As seen in the chart below, the VIRTUAL token remained in a narrow range between May and November.

VIRTUAL then entered the price increase phase due to demand exceeding supply and increasing Fear of Missing Out. This marking phase has occurred over the past two months and has fueled the token’s rise.

The coin is currently entering the distribution phase and a discount will likely follow. It has already formed a doji candlestick, a pattern characterized by a small body and long upper and lower shadows. This pattern usually shows an asset opening and closing at the same price; This is also a common reversal indicator.

During the price reduction phase, investors who bought during the FOMO period begin to exit their positions. In this case, the VIRTUAL price could fall to the next support level at $3.00, which is approximately 30% below the current level.

VIRTUALS price chart | Source: crypto.news Virtuals Protocol is the market leader in AI brokers

Despite the recent price drop, Virtuals Protocol remains a major player in the crypto industry, especially in the rapidly growing AI tool sector. First, the protocol has a circulating supply of 1 billion tokens, which matches its maximum supply, which does not mean that the token will be unlocked in the future. There is a possibility that the network will instead introduce a token burning mechanism to reduce the circulating supply.

Second, Virtuals Protocol operates in a rapidly expanding industry. Forecasts show that the AI ​​tool market will grow from $5.29 billion in 2024 to $216 billion by 2035. If these predictions are confirmed, Virtuals Protocol will be well positioned to become a major player in the industry.

Additionally, the protocol already has a thriving ecosystem. GAME by Virtuals’ market cap is over $245 million, while Luna and aixCB are valued at over $129 million and $492 million respectively. This growing ecosystem shows that Virtual Protocol can continue to gain traction.