contributor
Posted: December 14, 2024
Share this article
- Velodrome Finance (VELO) has gained by more than 108% in 24 hours to hit an ATH of $0.42.
- VELO’s rally started after Binance announced it was listing the token.
Velodrome Finance [VELO] has outperformed the broader cryptocurrency market after registering an over 108% gain in 24 hours. At press time, VELO traded at $0.325 with a market capitalization of $287 million.
Data from CoinMarketCap showed a surge in retail interest after trading volumes soared by more than 2,000%. The surging volumes caused volatile price movements where VELO jumped from $0.145 to an all-time high of $0.424 in less than one hour before retracing.
VELO’s rally was fueled by the Binance exchange announcing that it would list the altcoin on 13th December. VELO is already listed on other top exchanges including Coinbase.
Is Velodrome overbought?
VELO’s rally was triggered by high buying volumes as traders sought to become profitable during the rally. Per Lookonchain, one trader made a $448,000 profit on VELO within a few hours of buying the token.
The surging volumes have led to the Relative Strength Index (RSI) hitting overbought levels of 86. This could precede a short-term correction.
If the listing effect fades, and buyers who bought out of the fear of missing out (FOMO) start taking profits, the uptrend could halt, pushing the prices down.
Source: Tradingview
The Bollinger bands on VELO’s one-day chart also depict an overbought scenario, after the price shot past the upper Bollinger band. The widening bands further depict the high volatility that has rocked VELO’s price trend in the last 24 hours.
Due to the high volatility and massive spike in buying volumes, VELO is showing signs of being overheated, which could precede a downturn.
Reduced DeFi activity could dampen the rally
Velodrome Finance, a decentralized finance (DeFi) platform that runs on the Optimism layer two network, has registered a notable drop in Total Value Locked in recent months.
According to DeFiLlama, the TVL of this protocol stood at $92.78 million. Despite this TVL being at the highest level since November, it is down by more than 50% since the yearly high of $187 million recorded in April.
Source: DeFiLlama
The slowed Defi activity could dampen the long-term outlook around VELO. However, if it continues with the gradual increase it could bode well for prices.
Read Velo’s [VELO] Price Prediction 2024–2025
Can VELO sustain the uptrend?
VELO’s rally was fuelled by its listing on the Binance exchange, with the sudden rise in RSI showing strong buying activity. If these buyers decide to book profits after the rally, it could result in a trend reversal.
At the same time, the slow network activity as depicted by the DeFi TVL shows that the rally might not be sustainable.
