VIRTUAL Bounces Off Key Trend Line Support With Strong Volumes – $2 In Sight?

Virtuals Protocol (VIRTUAL) is one of the top-performing altcoins in the past 24 hours with gains of nearly 12% after a strong bounce off a key support level.

This token powers the Virtuals AI agent platform – a blockchain-based project that allows users to create AI-powered chatbots that generate revenue and issue a native token that others can buy to earn a share of that income.

VIRTUAL was one of the most popular AI tokens earlier this year. It rallied strongly in January this year and, at some point, its market capitalization reached $4.5 billion, which would put it in the same range as Ethena (ENA), OKB (OKB), and Pepe (PEPE) at the time of writing.

However, the token suffered a dramatic decline since it peaked in that same month as its popularity faded.

Despite the fact that top altcoins like Ethereum (ETH) and BNB Coin (BNB) have made new all-time highs during this cycle already, VIRTUAL is still trading 83% below that all-time high.

On-Chain Data Reveals Interesting Correlation

On-chain data shows that the project experienced a strong drop in network fees. This metric peaked in January at $16.6 million and subsequently dropped to $2.2 million a month after. This explains why the token has dropped so sharply since then. The AI agent hype ultimately faded.

VIRTUAL Price and Monthly Fees – Source: TradingView

In August, the protocol collected $2.8 million in fees. Comparatively, the strongest rebound in the price of VIRTUAL took place in May when the token spiked to $2.5 as fees surged to $5 million.

There seems to be a strong relationship between these two metrics. Hence, once we get more visibility of September’s trend we may use a run rate to estimate how high VIRTUAL could go.

Based on how high the token went in January, it seems that the price rises by around 23 cents for every $1 million in extra fees that the protocol generates. Hence, in August, the price should have jumped to around $0.70.

Yet, it stood above $1. This means that the market is ready to pay a premium, possibly as market conditions have improved.

Virtuals Protocol recently launched an initiative called the Agent Liquidity Engine (ALE). This is a dashboard that showcases the agent tokens that have the strongest “fundamentals”. As users focus on the most successful assets, this could drive higher volumes to the network.

If the launch of this program contributes to increasing the protocol’s fees, we may expect a jump in the price of VIRTUAL. Given the current market conditions, if fees rise to $5 million once again, Virtual could rise to $1.5 at least based on a price-to-fee ratio of 0.3 per every million produced.

Daily Chart Shows 22% Upside Potential Ahead

From a technical standpoint, VIRTUAL just bounced off a key trend line support at $1. This is also a key psychological threshold that market participants appear to be respecting.

VIRTUAL/USDT Daily Chart (Bitget) – Source: TradingView

A breakout above $1.4 would be significant as this level shows confluence between the 200-day exponential moving average (EMA) and an important supply/demand zone.

Trading volumes have been high around this level and currently account for 14% of the token’s circulating supply. This confirms the relevance of this price zone for market participants and could anticipate a recovery for VIRTUAL in the near term.

Even if it only gets to $1.4 and drops, this would mean a 22% upside potential from where the token is trading today.