Virtuals Protocol (VIRTUAL) Price Breaks Out, Setting Sights on $5 Rally

Virtuals Protocol (VIRTUAL), one of the standout performers in the artificial intelligence (AI) crypto space, has broken through a key technical level

Virtuals Protocol (VIRTUAL) token broke above a key technical resistance level on Tuesday, setting the stage for a potential rally towards the $5 mark.

The token, up more than 10% for the day, reclaimed the $2 psychological level after dipping briefly last week. This move also signaled the completion of a five-month consolidation phase.

Importantly, this breakout comes amid signs of improving market sentiment around AI tokens. Anticipation is high for NVIDIA's upcoming earnings report, which is expected to highlight strong AI-driven revenue growth.

With NVIDIA's revenue projected to increase by 65% year-over-year, investors are anticipating broader gains in AI-aligned cryptocurrencies such as VIRTUAL, which has close ties to AI ecosystems.

Virtuals Protocol token has been displaying strength in its fundamentals as on-chain activity soars alongside renewed interest from investors.

According to recent analysis by DefiNerds, the price-to-daily active addresses (DAA) divergence metric shot up by nearly 400% in just one week.

This metric, often a good predictor for price movements, suggests that the current rally is being driven by organic growth rather than short-term speculation.

At the same time, the Chaikin Money Flow (CMF) indicator, which tracks accumulation and distribution trends, remains above the zero line, signaling persistent buying pressure.

Moreover, the Bull Bear Power (BBP) histogram flashed consistent green signals, indicating that buyers currently have the upper hand in market momentum.

Recently, smart money investors have reduced their exposure, with holdings falling from 11.9 million to 7.1 million tokens. However, the technical strength appears to be countering these outflows.

Virtuals Protocol is also expanding its reach with a newly announced partnership with a top-tier blockchain gaming studio to embed VIRTUAL tokens in upcoming play-to-earn and metaverse titles.

This move will expand the token's real-world utility beyond speculative trading and introduce VIRTUAL to a new segment of users in the gaming ecosystem, sustaining demand for the token.

In other news, the $2.81 resistance level is the next key hurdle to watch out for. A breakout above this level could propel the token towards the 0.382 Fibonacci retracement level at $3.0688.

Further bullish momentum could drive the token to retest its all-time high of $5.13, which it last touched in January. This move would complete a full recovery and signal a continuation of the long-term uptrend.

However, traders should keep an eye on the $2.24 support zone. Failure to hold this level might invalidate the bullish outlook and trigger a drop toward $1.44.