Virtuals Protocol Drops 21% Amid Geopolitical Tensions

Virtuals Protocol (VIRTUAL) has experienced a significant decline in value over the past week, with a 21% drop pushing its monthly losses to 28%. This downturn is part of a broader market weakness influenced by heightened geopolitical tensions, particularly between Israel and Iran, which has also affected other cryptocurrencies such as Ethereum (ETH).

Despite the current bearish sentiment, there is a technical setup that suggests a potential bullish reversal for VIRTUAL. This setup mirrors a past fractal observed in Chainlink (LINK) before it made a substantial upward move. In 2024, LINK underwent a period of volatility, forming a head-and-shoulders top and entering a prolonged downtrend. It eventually bottomed out in a demand zone between $8.50 and $9.00, where it showed early signs of strength by reclaiming the 100-day moving average and printing a bullish MACD crossover. This confluence led to an explosive rally, sending LINK to $30 within a few months.

VIRTUAL appears to be following a similar pattern. It has formed a head-and-shoulders top pattern and has broken down from it, currently approaching its key demand zone between $1.21 and $1.32. This area has previously provided strong support for VIRTUAL. The current correction phase is developing below the 100 MA, making it a critical area to watch for a potential reversal. The fractal suggests that a consolidation-recovery phase could follow, potentially driving VIRTUAL back toward the $2 mark if the pattern holds.

If VIRTUAL holds the $1.21–$1.32 demand zone and shows signs of accumulation, especially with a reclaim of the 100 MA at around $1.82, the fractal setup suggests a bullish reversal could be imminent. This could trigger a move toward $2.80–$3.00 in the short term, and possibly higher if overall market conditions improve. However, investors should remain cautious given the broader market's macro stress from global conflicts. Technical confirmation, such as a bullish divergence or a moving average crossover, would be critical before taking positions based solely on this fractal.