- Chainlink is vulnerable to further losses after the sell-off below $10.5.
- The on-chain data confirms the bearish forecast as new addresses and whales decline.
Chainlink (LINK), the 6th largest digital asset with the current market capitalization of $3.9 billion, has been losing ground since the weekend. The coin has lost nearly 13% in the last three days, and the downside momentum seems to be gaining traction on Wednesday.
At the time of writing, LINK/USD is changing hands at $10.1, down 1.7% on a day-to-day basis. The cryptocurrency is most popular on Binance and Huobi Global, while its average daily trading volume is registered at $1.4 billion, in line with the recent figures.
Chainlink is in a predicament
From the technical point of view, LINK has topped on approaching the psychological resistance of $13 and resumed the decline. After a short-lived consolidation at $11, the bearish momentum has gained traction and pushed the price below the critical support created by daily SMA50 at $10.5.
This barrier served as a formidable backstop for the price on numerous occasions in September and October. Now that it is out of the way, the sell-off may be extended with the next focus on the long-term barrier of $8.6 reinforced by the daily SMA200. Since April, the price has been trading above this SMA, meaning that it has the potential to stop the sell-off and trigger the recovery.
It is worth mentioning that if the selling pressure behind LINK is strong enough to push it below the $8.6 support, the downswing may be extended towards $6.5 (3-day SMA100) and $6 (weekly SMA50).
LINK/USD daily chart
A candlestick close above $10.5 will bring the focus back to $11.9 (daily SMA100) and $13. This barrier limited the recovery at the end of October and in September and may trigger the downside correction if LINK's bullish trend fails to gain momentum. A sustainable move above this area will invalidate the bullish scenario and bring $15.6 into focus.
A supply wall is seen on approach to $10.5
The current market positioning confirms the technical picture and implies that LINK is vulnerable to further sell-off at this stage.
IntoTheBlock's In/Out of the Money Around Price (IOMAP) signals that there is strong resistance between the current price and $10.5 as over 9,000 addresses are holding nearly 47 million coins there. Notably, there are no significant barriers above this area, so LINK could rally if this resistance is broken.
Chainlink's IOMP data (Source: Intotheblock)
Meanwhile, the way south is mostly clear as there are no meaningful supply areas below the current price, signaling that the downside is the path of the least resistance until at least $8.8.
Investors flee from network
The number of new addresses has barely changed in the past month, meaning the network is not growing. Approximately 2,000 addresses have been joining the network on a daily basis since the beginning of October 30. This number has plummeted from over 10,000 a day in August, representing an 80% decline.
The downward trend in network growth is an alarming signal for price growth in the near future. The lack of newly-created addresses tends to affect the regular inflow and outflow of tokens in the network and hence impact liquidity.
Chainlink's new addresses (Source: Intotheblock)
Holder's distribution data shows that over 800 Chainlink holders with 1,000-10,000 in their wallets left the network since October 29. This is another red flag and a confirmation that investors are fleeing the network.
Chainlink's holders' distribution (Source: Santiment)
The sudden collapse is significant enough as these traders hold between $8 million to $80 million in LINK tokens in aggregate. A move of such a magnitude can have long-lasting consequences on the ecosystem.
Key levels to watch
To conclude, both technical and on-chain data imply that LINK/USD is vulnerable to the deeper sell-off towards the next critical support area of $8.6. This barrier should be able to slow down the bears; however, once it is cleared, the downside momentum will gain traction with the next focus on $6.5 and $6.
On the other hand, a sustainable move above $10.5 will improve the short-term technical picture and allow for an extended recovery towards $11.9 with the ultimate bullish target at $13. A move above this area is needed to invalidate the bearish scenario.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Polygon joins forces with WSPN to expand stablecoin adoption
WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.
Coinbase envisages listing of more meme coins amid regulatory optimism
Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B
As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: Rally expected to continue as BTC nears $100K
Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.