If you crumple or run your hand across crushed velvet, you'll notice the different layers of light and dark colors, with a pattern similar to frost on a window, especially when crumpled. Cakes can be made to look like almost anything, including crushed velvet, through the magic of coloring and different application techniques. The application technique to achieve this look on fondant isn't particularly difficult, but you should practice on an extra piece of fondant to test different shading and application methods before trying to translate the design to a cake.
Cover the cake with fondant in the lightest shade of the color you want for the crushed velvet look. If you want the darkest part of the "crushed velvet" to be deep navy blue, for example, use light to royal blue.
Mix food coloring powder with lemon extract to achieve a consistency somewhere between runnier acrylic paint and thicker oil paint. For best results, mix at least two different shades in the same color. When using two colors on top of a light blue fondant base, mix one color in deep navy blue and the second color somewhere between the lighter blue base color and the deep navy color. The amount of powder and lemon extract needed depend on the size of the cake, so just pay attention to consistency and mix more as needed. You must use an alcohol-based product, such as lemon extract, rather than water because the alcohol dries well, while water never dries and makes the fondant slimy.
Crumple a sheet of paper towel, a piece of wax paper or plastic wrap into a loose ball. Press down on the natural creases in the paper to create more definition -- think of this like pressing firmly along the crease when folding a piece of paper. The enhanced creases create the lines you commonly see in crushed velvet. You can use both of these materials to add texture to the cake or experiment with both on an extra piece of fondant to find which you like best. Use a plain, thin paper towel, not one that is quilted or textured with ribbing or bubbles because these will imprint onto the cake.
Dip the crumpled paper in the powdered food coloring mixture and allow the excess to drip off. Start with the lightest color.
Dab the paper all over the fondant to transfer the color. Dip the paper in the coloring when you run out of color. After covering the entire cake lightly with the first color, go back over some areas in lines or curved patterns to emphasize the color, making it look more natural, like you would see in crushed velvet.
Allow about one hour for the color to dry completely.
Dab the remaining colors over the cake, moving to the next darkest shade and finishing with the darkest shade and letting the color dry in between each application. Use a new piece of crumpled paper for each color. Dab the darker colors only on select areas of the cake, not all over it. If you look at a piece of crushed velvet, you'll notice the dark colors are more pronounced in some parts of the fabric and never distributed evenly throughout the material. It really helps to use a picture or a scrap of actual crushed velvet as a reference so you can imitate the pattern.
Brush the entire cake with pearl dust to give it the shimmery appearance of crushed velvet. Use a transparent pearl dust that adds no color or use a shade of the same color used to create the crushed velvet design. Simply dip a new artist's paintbrush in the powder and brush it lightly over the fondant. You must allow the food coloring paint to dry completely before adding the pearl dust or it won't distribute evenly.
Add color to the crumpled paper conservatively so the color application is subtle and you don't end up with runs on the fondant. You can always go back over the fondant with more food coloring, but you can't take it away if you add too much.
Powdered food coloring comes in many colors, so you can find all shades of red, blue, green or whatever color you want to achieve for the velvet. Alternatively, you can purchase the darkest shade of powdered food coloring you'll need, as well as white powdered food coloring and mix white into the darker shade to achieve a lighter shade.