Why Chainlink price is far from a market bottom despite Investors’ belief

• Chainlink investors’ sentiment at the moment is just as pessimistic as it was back in December 2022, right before LINK noted a 46% rally.
• The Relative Strength Index (RSI) suggests Chainlink price is not too far from being overbought, which historically has resulted in corrections.
• The lack of whale accumulation indicates that a rally might be far from happening for a while.

Chainlink investors, akin to other altcoin holders, have been riding high on the altcoin season. However, given the state of the market presently, there is a chance that these crypto market participants might end up being disappointed, as a huge rally may not be on the cards right now.

Chainlink price rise could be interrupted

Chainlink price is standing at $7.31, awaiting a signal to charge upward and mark new highs for the year. Given the expectations of the investors at the moment, an interesting observation can be made. The lows of the weighted sentiment of LINK holders indicate that pessimism is running high in these investors, just as high as it was back in December 2022.

This has led to investors drawing an inference that with a similar sentiment, Chainlink price might end up registering a similar rally as it did in December 2022 - January 2023. This would result in LINK climbing the charts by 25.6% from $7.31 to $9.14, bringing the digital asset to an eight-month high.

However, the Relative Strength Index (RSI) is far higher than it was back in December 2022. Rising from the lows of 31, Chainlink price had a lot of room before the indicator hit the overbought limit at 70.0. The overbought zone is synonymous with corrections as the market needs to cool down following sudden bullishness. 

LINK/USD 1-day chart

Presently, the RSI is just above the neutral line at 52, which means that the 25% rally would be cut by half, even if it was to occur. This would result in the price only charting a 12.8% growth, bringing the price rise to a halt after touching $8.20, allowing LINK to mark new 2023 highs.

But the chances of even a 12.8% rise happening are questionable, given the lack of bullishness noted in whale movements. The cohorts holding 1 million to 10 million LINK and 10 million to 100 million LINK have noted no significant increase in their balance for nearly four months. 

The only group of whales to note some increase in their holdings is 100,000 to 1 million LINK addresses, as their balance rose from 105 million LINK to 109 million LINK over the last month.

Chainlink whale movement

The declining supply on exchanges does suggest that either investors have been heavily accumulating or moving their supply to cold/self-custody wallets. However, given the lack of increase in retail investors’ holding, the latter of the two is the likely scenario at the moment.