The crypto AI sector tokens have taken a beating over the past week. CoinMarketCap data revealed that this sector’s leading tokens have all registered sizeable losses over the past week.
Except for Story [IP] (-7.53%), the top ten tokens within this sector have noted double-digit percentage losses, with Artificial Superintelligence Alliance [FET] the lowest at -16.84%.
Virtuals Protocol [VIRTUAL] was not performing much better, recording a 15.71% dip over the past week. Yet, from a technical analysis perspective, this pullback is welcome.
A buying opportunity in sight?
Source: VIRTUAL/USDT on TradingView
The 1-day timeframe saw a deep retracement after the swift rally to $1.19 made in the first week of January. In a report earlier this month, AMBCrypto had highlighted this retracement toward $0.75 as a likelihood.
Back then, the $0.73-$0.76 area was seen as a key demand zone. This remained true at present, though the short-term momentum and recent capital flows painted a bearish picture.
The price sank below the 20 and 50-day moving averages, and the CMF had moved below -0.05 to signal heavy capital flows out of the market.
Exchange flows shake bullish belief
Source: Glassnode
Apart from the technical indicators, the exchange netflows metric also appeared to favor the sellers. Over the past six months, the exchange flows (7DMA) have been predominantly positive. There were brief periods of outflows, such as August, November, and a couple of days ago.
The bearish argument was that holders continued to send VIRTUAL tokens to exchanges to exit their positions. It signaled a lack of market conviction.
Traders must buy now
While the netflows and indicators might be persuasive, the price action was more reliable. The VIRTUAL breakout in early January, past the $0.73 and $1.05 swing levels from the multi-month downtrend, represented bullish intent.
Until the 78.6% retracement level at $0.758 is ceded to the bears, swing traders can maintain this bullish bias. The deep retracement represented a buying opportunity, targeting $1.19 and $1.33.
Final Thoughts
- The VIRTUAL structure has shifted bullishly after the early January rally, and it remains bullish.
- The token established a short-term range between $0.8 and $0.88 over the past week that lower timeframe traders can keep an eye on.
