Three reasons why VIRTUAL rallied over 30% today

VIRTUAL has surged 73% since its monthly low on January 13, with the rally accelerating after the project announced new incentives for its ecosystem builders and community.

AI agent platform Virtual protocol (VIRTUAL) rose to $3.98, 39% higher than its intraday low on January 16, while increasing its market capitalization to over $3.8 billion at the time of writing. Its daily trading volume also increased by 37%, surpassing $821 million amid increasing trading activity.

Looking back on its annual gains, the altcoin surged nearly 37,000%, making it the best-performing asset among the 100 largest cryptocurrencies, according to CoinGecko data.

There are three main reasons why VIRTUAL has recovered today.

First, the project revealed an initiative to support the development of AI agent projects on the platform by offering sustainable rewards to its ecosystem builders. These rewards are funded by post-bail taxes, which are the fees generated by the platform once the AI ​​agents go live and start operating. See below.

Through this initiative, Virtuals Protocol likely aims to drive greater adoption of its ecosystem, which could generate interest and recognition from new investors. This, in turn, is expected to contribute to the long-term growth and potential value appreciation of its leading utility and governance token VIRTUAL.

Second, the project has announcement a buyback and burn initiative, in which nearly 13 million VIRTUAL tokens, from post-bond trading revenue generated by various AI agent projects, will be used to burn the respective agent tokens over a period of 30 days. Token burning permanently removes these tokens from the circulating supply, creating deflationary pressure that can potentially increase their value.

Third, revenue generated by the Virtuals protocol has increased significantly over the past few months, from $240.68 thousand in October to over $2.5 million in mid-January. This revenue growth generally indicates an increasing number of AI agents deployed on the platform and a higher trading volume between them, a sign of a growing and thriving ecosystem, an attribute often viewed positively by investors.

Other factors that may have contributed to VIRTUAL’s rally include Bitcoin’s Recent Rally Surpassed $100,000 and a growing sense of risk in the market, as indicated by the Crypto Fear and Greed Index moving further into the “Greed” zone.

VIRTUAL’s rally also coincided with a broader rally in AI agent-related coins, which rose 12.7% over the past day, partly motivated by performance of LUNA and AIXBT, tokens from two popular AI agent projects deployed on the virtual protocol, which saw gains of 24% and 27%, respectively.

VIRTUAL price action

On the VIRTUAL/USDT 1-day chart, the token’s price remains above the 50-day moving average and the 100-day moving average, suggesting that the bulls have started to dominate the market. This is confirmed by the Relative Strength Index reading which rose to 58.

Additionally, the average directional index showed a reading of 28. A reading above 25 indicates clear trend strength, which, in this case, reflects the increasing uptrend of the market.

Additionally, the Moving Average Convergence Divergence indicator shows that the MACD line (blue) is pointing upwards as it moves closer to crossing the signal line (orange), which will confirm the bullish reversal.

Given these technical signals, VIRTUAL could potentially retest its all-time high of $5.07. A breakout above this level could lead to price discovery, with the token potentially reaching $5.25, representing a 33% increase from its current price of $3.79.

However, if the MACD line fails to rise above the signal line, this bullish scenario would be invalidated, which could lead the altcoin to fall towards the psychological support level of $2.50.