Is Virtual Still Cheap? 🤔 Virtuals Protocol Crypto Token Analysis

Summary

Virtual Protocol is showing a promising recovery, standing out as the top performing cryptocurrency among the top 100. Over the last 24 hours, it has surged by 13%. The video delves into the factors influencing its demand and supply, examining both the perpetual futures and spot markets. Despite past declines, there's potential for further outperformance. Notably, small retail investors and large holders are increasing their stakes, while those in the middle are reducing theirs. The analysis suggests that interest is growing again, with the potential for a price squeeze. The creator offers in-depth analytics tools for better market understanding, emphasizing the importance of being better informed for trading and investing strategies.

Highlights

• Virtual Protocol leads as the top performer with a 13% spike in the past day! 🎉
• Retail and mega-investors are buying in, while medium-sized investors cash out. 📈
• Examining futures and spot markets reveals crucial dynamics moving Virtual's price. 🔎
• Potential price squeezes due to shorts betting on falling prices could fuel further rallies. 💥
• Dune Analytics tools offer a unique edge in understanding market movements! 🛠️

Key Takeaways

• Virtual Protocol shines as the top performer, rallying 13% in just 24 hours! 🚀
• Past declines recovered; further gains seem possible, especially with leverage's influence 📈
• Small and mega investors are buying, suggesting growing interest and potential price hikes! 📊
• Spot and futures market analyses uncover influential trends and opportunities for trades 🔍
• Strategic insights emphasize the significance of informed trading through quality data analysis 🤓

Overview

Virtual Protocol has emerged as the star in the crypto world recently, boasting a remarkable 13% rise in just 24 hours. The video by Gerhard from Bitcoin Strategy explores this impressive recovery, highlighting the interplay of demand and supply within the market. Both the perpetual futures and spot markets are pivotal in understanding these movements. The substantial increase in value raises intriguing questions about sustainability and future potential.

A fascinating dynamic unfolds as smaller retail investors and big players continue to buy more Virtual tokens while medium-sized investors reduce their holdings. This mixed reaction points towards a growing interest and speculative potential, especially given the possibility of forced liquidations from short sellers. Gerhard delves into these nuances, showcasing the importance of market data to spotlight opportunities.

Gerhard also extends an invitation to leverage powerful analytics tools he's crafted, hosted on Dune Analytics. He underscores the importance of informed trading, suggesting that while market efficiency is debated, having an edge in data analysis is crucial. This video serves as an educational portal for traders wishing to deepen their understanding and improve their strategic approaches.

Chapters

• 00:00 - 00:30: Introduction and Overview of Virtual Protocol The chapter "Introduction and Overview of Virtual Protocol" discusses the recent performance of Virtual Protocol, a cryptocurrency that has shown significant recovery and is currently the best performing among the top 100 cryptocurrencies in the past 24 hours. The chapter explores the sustainability of this rally by examining various factors influencing demand and supply. It considers the perpetual futures market, which involves leveraged bets on the price, and the spot market, focusing on direct onchain data. The discussion includes analysis of activities on the base chain to identify the buyers and sellers. Notably, Virtual Protocol experienced a 13% increase in value over the last 24 hours, indicative of its strong performance.
• 00:30 - 01:00: Performance of Virtual Protocol and Comparison with Fatcoin The chapter focuses on the performance of Virtual Protocol as compared to Fatcoin. It discusses previously covered fundamental data and regularly published videos on Virtual Protocol. A specific trading fee chart is analyzed, showing a peak at the beginning of 2025, followed by a substantial decline and subsequent slight recovery. This chart is important as it reflects potential demand, with increased protocol usage indicating higher demand.
• 01:00 - 01:30: Supply and Demand Analysis of Virtual Protocol The chapter discusses the interaction between virtual tokens and the virtual protocol price, emphasizing the importance of both supply and demand dynamics. It notes that the supply had been stable but anticipates an upcoming unlock in June, raising questions about the speed at which these tokens will be sold off. Virtual protocol is highlighted as being traded on the base chain, which is a layer 2 scaling solution on top of Ethereum, with trading taking place in comparison to ETH.
• 01:30 - 02:30: Price Relative to Ethereum and Potential Gains The chapter discusses the importance of analyzing relative valuation charts to understand asset movements. It highlights a significant 83% drop in valuation relative to Ethereum, followed by a 78% drop. Both declines have seen recovery. The chapter explores the potential for additional outperformance by comparing the all-time high of virtuals to their current price.
• 02:30 - 03:30: Perpetual Futures and Market Squeeze The chapter titled 'Perpetual Futures and Market Squeeze' examines the relationship between the price of a protocol and its market usage. The discussion highlights a 73% increase in usage, which, notably, still does not reach the peak levels observed in January 2025. A notable observation is that the current price of the protocol is high relative to its usage compared to a few months prior. The chapter explores the possible influence of leverage, specifically perpetual futures, on the price. The presence of numerous bets on the price can drive it upwards, affecting the overall market dynamics.
• 03:30 - 04:30: Spot Market Insights and Liquidity Analysis The chapter discusses the relationship between futures trading (perpetual contracts) and the spot market, highlighting how the actions of traders can influence prices. When traders bet heavily on falling prices (going short), a situation can arise where those who are short might have to cover losses if prices increase. This is because if market manipulators or other forces push up the spot market price by buying significant supply, it can cause shorts to be liquidated, forcing them to buy back at higher prices, thereby driving prices even higher. The chapter underscores the dynamics of liquidity and how trader sentiment can influence market movements.
• 04:30 - 05:30: Token Holder Analysis and Market Behavior The chapter discusses the strategy of liquidating shorts to increase the price of a virtual protocol. It describes a specific instance on February 20th where this tactic was used, with the price increasing from $1 to $122 due to a micro squeeze. The focus is on understanding market behavior through such events and predicts a possibility of similar events in the near future.
• 05:30 - 06:30: Market Trends and Investment Strategies In this chapter titled 'Market Trends and Investment Strategies,' the discussion focuses on token trends on the base chain. The virtual protocol emerges as the leading token, boasting a significant liquidity pool of $266 million, whereas the second-ranked token, Aerodrome, holds merely a fraction of this liquidity. Additionally, the chapter highlights the diversity in token holders on the base chain, which exceeds 600,000, pointing out that not all holders have significant investments; some may only possess a minimal amount while others hold substantial values in their wallets.
• 06:30 - 07:30: Dune Analytics Tool and Onchain Data Utilization The chapter discusses the usage of Dune Analytics Tool in analyzing on-chain data, specifically focusing on the valuation and distribution of a particular token. It describes how wallets are categorized based on the number of tokens they hold or sell. For example, a wallet with 500 tokens is considered 'small retail' and is approximately valued at $1,000. Further categorizations are based on selling at least 5,000 tokens, equating to $10,000, and beyond. The chapter utilizes visual representations in charts to effectively convey these classifications and valuations.
• 07:30 - 09:00: Trading Strategies and Risk Management This chapter discusses the behavior of different types of investors in the market, particularly focusing on their trading strategies and how they manage risk. It highlights that while individual investors have been buying more tokens, medium-sized retail investors and large players, known as whales, have been selling during the recent market rally. Moreover, the chapter touches upon the changing number of buyers and sellers, suggesting a recovery in activity. It also provides insight into mega whales and institutional investors by examining wallet sizes, specifically those holding at least 500,000 virtual tokens, equivalent to a million worth.
• 09:00 - 10:30: Community Engagement and Membership Information The chapter titled 'Community Engagement and Membership Information' discusses the recent buying and selling activities of different market participants in relation to a certain token. It highlights interesting dynamics where smaller holders (with $1,000 investments) and very large holders (with $1 million investments or more) are both acquiring tokens. The discussion also notes the increase in numbers of centralized exchanges involved, emphasizing that these activities are independent of price movements, focusing instead on the amount of tokens held. This phenomena is described as fascinating, as it shows simultaneous interest in both the lower and the upper extremes of the market.

Is Virtual Still Cheap? 🤔 Virtuals Protocol Crypto Token Analysis Transcription

• 00:00 - 00:30 Virtual Protocol is finally recovering. It's the best performing cryptocurrency in the last 24 hours among the top 100. The question is, how much longer can this rally last? We're going to look at various drivers of demand and supply. We're going to look at the perpetual futures market, so the levered bets on the price. We're also going to look at the spot market, so direct onchain data. What is happening on the base chain? Who is buying, who's selling? Now, in the last 24 hours, virtual protocol went up by 13%. And that 13% was by quite a
• 00:30 - 01:00 margin. The second best performer was Fatcoin. We've already talked about a lot of fundamental data in prior videos. I'm publishing videos on virtual protocol regularly. Over here, for example, have a look at this. This is the trading fees of virtual protocol over time. We peaked at the beginning of 2025, then had a massive decline subsequently, and now we are slightly recovering again. The reason why this chart matters is because it's one approximation of the potential demand. Right? The more the protocol is used, the more demand there will be for the
• 01:00 - 01:30 virtual token. A lot of those virtual AI agents are directly coupled with the virtual protocol price. The supply of course also matters. It had been stable over the last months, but in June there will be an unlock. The question is how quickly will that unlock get sold off. Now virtual protocol is traded on the base chain and base is a layer 2, so a scaling solution on top of Ethereum. So virtual itself gets traded versus Eve. What we see over here is the virtual performance relative to ETH. So I like
• 01:30 - 02:00 those relative valuation charts. They always give us a clearer picture of what happens idiosyncratically to an asset. And we did have our small crisis. So this was an 83% drop of virtual relative to Ethereum. What we see over here is a 78% drop. We have recovered from both of those declines. But what I find interesting is when we take the all-time high in virtuals and we take the current price relative to that all-time high, we could see an additional outperformance of maybe
• 02:00 - 02:30 73%. But when we look at the usage of the protocol, if we increase that by 73%, we don't get anywhere near the heights of January of 2025. So it seems like now the price is higher relative to its usage compared to a few months ago. One potential reason for that higher price could be leverage or in other words perpetual futures. If there are a lot of bets on the price, the price tends to go up. So this is the open
• 02:30 - 03:00 interest in green and the virtual price in yellow. When there are more and more bets on the pers, the price on spot also tends to go up. Right now the majority of those per traders are actually betting on falling prices. So the shorts have to pay the longs in order to bet on falling prices. Thus there is a potential risk for those shorts to get liquidated if the market manipulators decide to squeeze them. In other words to buy up a lot of the supply on the spot market to push up the price to
• 03:00 - 03:30 liquidate the shorts to push up the price even further. This for example happened over here on the 20th of February. The price of virtual was at $1. The open interest weighted funding rate was very negative. So shorts had to pay a lot of fees. And then came a little micro squeeze. The virtual protocol price went up by 22% to $122 until the open interest funding rate was positive again. There's a good chance we see something similar again very soon. Let's go back to the spot
• 03:30 - 04:00 market. So let's have a look at what happens directly on the base chain. Virtual is still the largest of the tokens according to their liquidity pool size on the base chain. So here are the trending tokens. The virtual protocol is at the top with a liquidity of $266 million. Number two is Aerodrome and that has only 1/if of the liquidity. There are more than 600,000 holders on the base chain, but not all of those holders are created equal, right? Some of them might just hold a few cents of the token while other wallets might hold
• 04:00 - 04:30 hundreds of thousands of dollars worth of the token. And so since the price is currently at roughly $2, if a wallet holds 500 tokens, it has roughly $1,000 worth of the token. That's what we count here on the chart on the left. So that's what I consider small retail. To be counted for the chart in the middle, a wallet has sold at least 5,000 tokens. So that's now $10,000. To be counted for the chart on the right, it's another 10x. That's 50,000 tokens or $100,000 worth of the token. The small retail
• 04:30 - 05:00 investor tended to buy in more and more. They recently bought some additional tokens again, but medium-siz retail and Wales tended to rather sell this recent rally. They went down in numbers and that happened while the number of buyers and sellers is actually currently recovering. Let's have a look at the number of mega whales and institutional investors. So this is now the number of wallets that have at least 500,000 virtual tokens. So a million worth of
• 05:00 - 05:30 the token. They interestingly enough did buy in the last few days. So while the $100,000 people sold, the $1 million people bought and the $10 million people or rather centralized exchanges, they also went up in numbers. So those charts are independent of the price movement, right? Those are just number of tokens. Now isn't that fascinating? The extremes in the market are buying. So the small holders with $1,000 are buying. The very big holders with at least a million
• 05:30 - 06:00 dollars worth of the token, they are buying as well, but the middle is selling. It appears as if interest in the token is growing again. And so since the market as a whole is going up, Bitcoin trends upwards. Money is flowing into the space through stable coins. I think there's a good chance that virtual will benefit from this more than average just because of the inherent leverage just because it's smaller than just the average altcoin. There might even be a chance that even more people bet on falling prices with that upcoming unlock. And again, as there's more and
• 06:00 - 06:30 more short interest, the price is more likely getting squeezed. Could we go back to $4 in virtual again? Potentially. But I think the most important chart is the price relative to Ethereum. After a 70% gain, we're probably already quite elevated and it might make sense to at least take partial profit. Now, some people might make the argument that all of this analysis, it doesn't help at all because markets are efficient. But I tend to disagree because it's people that make
• 06:30 - 07:00 markets efficient. There are clearly winners and losers in the game and the winners tend to continue to win. So it's not just a game of luck, it's a game of luck and skill. And the nice thing about crypto is that we've got much more data in this market compared to other markets because every transaction is publicly recorded on the blockchain where very few people actually use that data properly. And that's in the end where winners and losers are born. People that don't look into the details enough, they tend to lose over time. That's the vast
• 07:00 - 07:30 majority. Now, the charts that you have seen in this video come from a tool that I've developed myself on top of the Dune Analytics platform. It's part of the premium membership of this channel. There are two dashboards. There's a dashboard for Ethereum related blockchain. So, those are the ones we can analyze. We can plug in any token into this tool and then we can see how many large holders are there, how many small holders are there, how many new users enter a token, and how many buyers and sellers do we have over time. It's also always useful to look at the token
• 07:30 - 08:00 ownership, right? Is a token mainly held just by the whales, by the people that have more than $100,000 worth of the token? If that's true, it's potentially, especially if that happened forever, a quite dangerous token. And so this is how I think about this fundamentally. The target with trading and with investing is to be better informed than the average, to be the person that makes the market efficient. If we are better skilled than the average person, then we should over time also make positive expected value bets. That means that not
• 08:00 - 08:30 every single trade will be positive, but on average we should make money again because we can estimate the probabilities better. We can see the dangers and the potential upsides better. Now, I have made more than 100 tutorial videos on various topics within crypto. how to do onchain analytics, how to build a dune dashboard like we've just seen, but of course you also get access to the dashboard itself. Also about risk management, about how to properly use leverage if that's your
• 08:30 - 09:00 thing. All kinds of videos. Feel free to check them out. The newest video is this one, how to use perpetual futures and how to use the hyperlquid platform to beat others. The videos are posted on the website, but they're also posted directly in Telegram. And here's the feedback to that tutorial. Feel free to stop the video and read through this yourself. But of course, we also need to start somewhere and so I'm personally of course sharing my own trades as well as I open them. Of course, I can't share the newest trades here on YouTube. But have a look at this. This is on March
• 09:00 - 09:30 3rd. I'm adding another short Cardano relative to the US dollar and the explainer was in a premium update video. So I publish premium update videos every 3 to 4 days. I then added more exposure on the 11th of March and I then closed it on the 7th of April. So, of course, not every trade works out that well, but Cardano went down relative to Bitcoin by 36% during that time. And so, with this membership, I want to do both. Of course, I want to make it profitable very quickly. That's why I share my
• 09:30 - 10:00 trades. But I also want that the vast majority at least of the members takes the time to learn as much as possible. That in the end, you might not even need the membership anymore. you can make your own profitable trades. Now have a look at this. This is where our members share their winning trades. If you use the right leverage, if you know how to do proper risk management as well, you can make hundreds of percent in a single trade. It's all about being prepared and knowing the data better than most other market participants. So feel free to check it out. It's currently $125 per
• 10:00 - 10:30 month. The price has been reduced because currently the attention on crypto is still relatively low. Once Bitcoin hits new all-time highs again, then I might go back to the 165. But the 125 is locked in for everybody that signs up now. So, when the price increases, when you are still subscribed, your price will not increase. If it's your first time here, feel free to subscribe. I publish this regularly. A like would be very much appreciated as well. It helps the channel grow. See you next time on YouTube or see you in premium. There's also a link to premium directly here on the right. Just click on that. It will
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