Velo's Short-Term Correction and the Risks of Overbought Crypto Markets

In October 2025, Velo3D (NASDAQ: VELO) finds itself at a crossroads. The stock's recent 12.5% pre-market surge to $6.67 on October 26-driven by Amaero's certification of its C103 and Ti64 powders-has thrust it into the spotlight of the additive manufacturing sector. Yet, beneath the optimism lies a critical question: Is this rally a sustainable breakout or a short-term overbought condition ripe for correction?

The NASDAQ Migration and Liquidity Dynamics

Velo's migration to NASDAQ on August 19, 2025, was a calculated move to escape the OTC market's volatility and attract institutional capital, according to VELO's NASDAQ strategy. This shift aligns with a broader trend: 47 companies joined the Composite Index in Q3 2025, signaling a race for liquidity and credibility. However, the transition also exposed the stock to algorithmic trading pressures and heightened scrutiny. For short-sellers, this duality-improved liquidity versus algorithmic fragility-creates a volatile backdrop.

The 20 EMA (Exponential Moving Average) is a key barometer here. While specific October 2025 EMA data remains elusive, the stock's consolidation above the 0.236 Fibonacci retracement level suggests a potential inflection point, a view echoed in the Bitget coverage. Historically, such levels act as psychological barriers, often triggering corrections when momentum wanes.

Overbought Conditions and Tactical Short-Selling

The 445% revenue surge at Amaero in Q3 2025 and Velo's partnership with iRocket to supply Sapphire AM machines for defense hardware have fueled bullish sentiment, a theme highlighted in the Bitget piece. Yet, these catalysts also raise red flags. Overbought conditions in crypto and tech stocks often precede sharp corrections, especially when fundamentals lag price action.

For short-sellers, the absence of concrete RSI or MACD readings (which would confirm overbought territory) necessitates a cautious approach. Instead, traders might focus on structural risks:
1. Algorithmic Vulnerabilities: The Hagens Berman lawsuit targeting AI-powered betting fraud underscores systemic risks in algorithmic markets; the Bitget analysis flagged similar algorithmic hazards. A sudden pullback in VELO could trigger cascading sell-offs if automated systems misinterpret volatility as a trend reversal.
2. Institutional Exit Risks: With 51 companies leaving the OTCQX Composite Index in Q3 2025, the market's competitive landscape is shifting. Velo's NASDAQ debut may not shield it from broader outflows if macroeconomic headwinds emerge.

Risk Management in a Fragmented Market

Short-sellers must balance aggression with prudence. A tactical approach could involve:
- Fibonacci Retracement Levels: Monitoring the 0.236 and 0.382 levels as potential support zones for entry points.
- News-Driven Catalysts: Using Amaero's certification and iRocket's AM adoption as trailing indicators to time exits.
- Diversification: Pairing VELO shorts with longs in more stable sectors (e.g., Commerce360's retail payment initiative) to hedge against systemic risks, as noted in the Bitget analysis.

Conclusion: Navigating the Edge of Optimism

Velo3D's October 2025 rally is a microcosm of the broader market's tug-of-war between innovation and overvaluation. While the NASDAQ listing and strategic partnerships signal long-term potential, the lack of concrete technical indicators (like EMA or RSI) forces traders to rely on structural analysis. For short-sellers, this means treating the stock as a high-risk, high-reward proposition-leveraging Fibonacci levels and algorithmic risks while maintaining tight stop-losses.

In an era where 47 companies vie for Composite Index inclusion and algorithmic trading dominates, the line between bullish momentum and overbought peril is razor-thin. Velo's story is far from over, but for now, the 20 EMA and Fibonacci levels offer a framework to navigate the uncertainty.