Short squeeze or recovery? Analyzing on-chain data to break down Power Protocol (POWER)'s 370% weekly surge in GameFi extreme market conditions

In the first quarter of 2026, the crypto market stabilized while seeking new narrative directions. After a short-term rotation of Meme Coin hype, funds quietly shifted toward projects with practical use cases. Among them, the GameFi sector once again became a focal point due to its unique “gaming + finance” attributes. During this recovery, a GameFi token called Power Protocol (POWER) attracted widespread attention with an extremely rare surge in price.

According to Gate data, as of February 27, 2026, Power Protocol (POWER) was priced at $1.86, with a 24-hour increase of +71.96%, and a 7-day gain of +396.59%. This performance made it the absolute “top gainer” in the crypto market over the past week. However, behind this extreme price volatility, is there a fundamental shift or just short-term movement driven by leverage and sentiment? This article will analyze the event timeline, on-chain data, market sentiment, and risk structure to deeply reconstruct and logically interpret this GameFi token explosion.

From Silence to Explosion: The Value Starting Point of POWER

Power Protocol positions itself as the infrastructure layer for blockchain gaming, aiming to integrate fragmented Web3 gaming ecosystems through a unified token economy model. Its core flagship product is Fableborne, a mobile action RPG developed by UK-based Pixion Games. Even before launch, the game accumulated over 400,000 beta testers, with peak daily active users reaching 108,000, and generated $21.5 million from NFT presales, laying a solid user and funding foundation for subsequent protocol development.

The recent price surge of POWER is not an isolated event but the result of resonance among various internal and external factors. Externally, after a long period of dormancy, the GameFi sector began showing signs of recovery in early 2026, with established projects like Axie Infinity (AXS) experiencing over 70% gains this year, and market attention to “gaming + blockchain” narratives reigniting. Internally, a key catalyst was the February 24 announcement that top-tier gaming venture capital firm BITKRAFT Ventures invested an additional $3 million into Power Protocol, raising total ecosystem funding to $15.5 million. This news directly triggered the current rally.

How Capital Injection Ignited the Leverage Rally

Understanding POWER’s explosive rise requires viewing it within a longer-term and sector rotation context.

In early 2026, the market experienced a rapid rise led by Meme Coins. However, as Meme Coin momentum cooled in mid to late February, funds began seeking new outlets. Data shows that during this period, the GameFi sector demonstrated strong resilience, becoming a beneficiary of capital rotation. Power Protocol coincidentally received a critical external endorsement at this juncture.

Key Timeline Recap:

• December 5, 2025: POWER token officially launched at $0.08, with an initial circulating supply of only 21% (210 million tokens). Low circulating supply foreshadowed high volatility later.
• Around February 14, 2026: On-chain data showed medium-sized whale addresses holding 1 million to 10 million POWER starting to reduce holdings steadily.
• February 24, 2026: BITKRAFT Ventures announced a $3 million strategic investment, igniting market sentiment and initiating a major upward wave.
• February 26–27, 2026: POWER surged to a peak of $2.61 before correcting, with intraday volatility exceeding 100%, and on-chain liquidation data spiking.

On-Chain Data Breakdown: Leverage and Whale Battles

The core driver of this POWER rally was not solely driven by buy orders but a complex process triggered by positive news, amplified by leverage liquidations, and sustained within supply-demand dynamics.

Fact 1: Price Discovery Driven by Leverage

According to Coinglass liquidation data, during February 26–27, total forced liquidations of short positions reached $15.62 million, while long liquidations were only $2.77 million, with a short-to-long liquidation ratio close to 6:1. This indicates that the rapid price increase was mainly driven by forced short covering, a classic short squeeze. Such leverage-driven rallies often differ significantly from genuine demand in spot markets.

Fact 2: On-Chain Capital Battles

On-chain data reveals divergence among investor tiers. Medium-sized whales holding 1 million to 10 million POWER began large-scale selling from February 14, reducing holdings from about 14.66 million to 7.2 million, nearly 50% off. Conversely, super whales holding 10 million to 100 million POWER continued net buying, increasing holdings from 346 million to 403 million, net adding 56 million.

Medium whale selling: Santiment

This “big fish eat small fish” behavior illustrates a process where chips shift from cautious profit-taking to long-term accumulation by large whales. The continued accumulation by super whales provides structural support for the price, explaining why the token remained high despite significant medium whale sell-offs.

View: The Double-Edged Sword of Low Circulation

POWER’s current circulating supply is only 2.1 billion tokens, accounting for 21% of total supply, implying a fully diluted valuation (FDV) nearly five times its current market cap. Low circulation means that relatively small capital can generate substantial price movements, acting as a powerful catalyst during upward trends. However, it also suggests potential downside pressure when tokens unlock, as large whales may begin to sell. Their current accumulation might be part of longer-term ecosystem planning rather than short-term arbitrage.

Market Sentiment Divergence: Technical Discrepancies and Whale Support

Market opinions on this extreme POWER rally are sharply divided.

Mainstream Bullish View:

Optimists believe the rally is supported by solid fundamentals. Fableborne’s over 400,000 testers and $21.5 million in NFT presale revenue provide real application scenarios and value capture potential. Backed by top-tier capital like BITKRAFT, they see this as a fundamental-driven value return and a clear sign of GameFi’s recovery.

Mainstream Bearish View:

Pessimists point to technical and on-chain divergence signals. They highlight that from February 25–27, the 4-hour chart showed a classic bearish divergence: price hit new highs while RSI’s high points declined, indicating waning momentum. Additionally, exchange net inflow/outflow data showed a sharp decrease in buy volume from 2.74 million tokens outflow on February 24 to near zero, suggesting spot buying pressure has dried up. The current strength may be more a result of short covering than genuine demand.

Power Protocol price structure: TradingView

Structural Leverage in the Context of Fundamentals

Combining the above facts and viewpoints, we can take a more measured look at the “GameFi revival” narrative.

While POWER’s rise is supported by fundamentals like user data, product progress, and funding news—distinguishing it from pure Meme Coin speculation—the 370% weekly increase cannot be fully attributed to fundamentals alone.

Hypothesis: BITKRAFT’s investment acted as a catalyst, igniting bullish sentiment. But due to POWER’s small circulating supply and the presence of significant counterparty positions in derivatives markets, the rally quickly evolved into a leverage-driven short squeeze. Large whales’ accumulation may be preemptive, anticipating such volatility caused by leverage imbalance.

Thus, this rally is best characterized as a “structural leverage rally underpinned by fundamentals.” Fundamentals set the stage and story, but leverage and supply-demand imbalances determine the magnitude and intensity.

Reigniting Confidence in GameFi and Revealing the Playbook

POWER’s explosion has multiple implications for the GameFi sector and the broader crypto market:

• Reviving GameFi confidence: In a market lacking hot topics, POWER’s wealth effect successfully drew funds and attention back to GameFi. It demonstrates that high-quality game content and economic models can still capture significant market value.
• Reinforcing “capital + product” dual-drive: The case of POWER underscores the importance of top-tier VC backing (like BITKRAFT) in project initiation and narrative building. Institutional endorsement not only provides funding but also signals market confidence, guiding retail and whale capital flows.
• Revealing the dynamics of low-circulation tokens: POWER’s trajectory offers a classic case study of “low circulation + high leverage” tokens. It illustrates the complex game among whales, retail investors, and leverage positions before token unlocks, and how this interplay can lead to extreme volatility.

Three Possible Paths for POWER: A Scenario Analysis

Based on current price structure, on-chain data, and capital flows, POWER’s future evolution may follow several scenarios. It’s important to note these are logical deductions based on existing facts, not price predictions.

Conclusion

Power Protocol (POWER)’s astonishing performance over the past week encapsulates the complexity of the 2026 crypto market. It combines the macro narrative of GameFi revival with the influence of top-tier capital and the fierce battles among whales and leverage traders. While fundamentals underpin the story, the intensity of the rally is driven by leverage and human psychology.

For market participants, POWER’s story is far from over. Whether sustained whale accumulation can support future growth or technical divergence and unlocking pressures will dominate depends on the evolution of GameFi narratives and overall market liquidity. What remains certain is that in this intertwined landscape of facts, opinions, and speculation, maintaining data sensitivity and logical clarity is more important than trying to predict prices.