Chainlink price risks another healthy correction despite LINK being an outlier in choppy altcoin market

• Chainlink price has posted significant gains over the last week, distinguishing itself among altcoins.
• LINK could drop 20% as part of a healthy correction with five successive peaks and four troughs to show.
• Invalidation of the bearish thesis will occur if the altcoin records a higher high above the $17.67 local top.

Chainlink (LINK) price has consolidated within a fixed range since the second week of November 2023, a pattern that has sustained LINK in the face of a choppy altcoin market. While most cryptocurrencies continue to chop, Chainlink boasts upwards 7% gains over the last day.

Also Read: Chainlink Price Prediction: Investor interest in LINK collapses amid consolidation

Chainlink price likely to fall as part of a healthy correction

Chainlink (LINK) price has revisited the $16.86 barricade for the fifth time in a row since November and the $13.08 support four times over the same duration. With these levels forming peaks and troughs, respectively, the price action has formed a defined range that hints at a possible correction if history is enough to go by.

A rejection from the $16.86 resistance level could see Chainlink price lose the support offered by the 50-day Simple Moving Average (SMA) and the 100-day SMA at $14.87 and $14.43, respectively. If both these levels fail to hold as support, LINK price could extend south to the bottom of the market range at $13.08, nearly 20% below current levels.

In a dire case, Chainlink price could slip past the aforementioned level to test the 200-day SMA at $10.772. The 50-day SMA is inclined south, showing this is the path with least resistance.  

If the pullback does happen, it could provide later buyers with a possible entry at reduced LINK prices. The ensuing buying pressure could see the pattern repeat, and Chainlink price would likely find inflection around the $13.08 support.

LINK/USDT 1-day chart

On-chain metrics support a possible correction for Chainlink price

Multiple on-chain metrics from Santiment support the bearish outlook, starting with the Market Value to Realized Value (MVRV) ratio, which determines  the average profit or loss of traders in a given time period. The MVRV is in the danger zone. Every time the MVRV has crossed above this level, Chainlink price has reacted with a correction.

In the meantime, all LINK holders are on average currently 10X up on their initial investment, which means profit booking appetite could already be neck high by now.

LINK Santiment: MVRV 7-day

Also, the LINK supply on exchanges has recorded a steady climb, up 2.4% from the January 2024 bottom of 151.34 million to the current 155.01 million. With increasing amounts of LINK tokens on known exchange wallets, it points to a buildup in short-term selling pressure.

The uptick in Exchange Flow Balance also accentuates the bearish supposition. The positive value of 46,000 points to more LINK tokens coming onto exchanges than those exiting. This hints at a possible intention to sell.

LINK Santiment: Supply on exchanges, Exchange Flow Balance

Conversely, if the bulls enhance their buyer momentum, Chainlink price could shatter past the $16.86 roadblock before reclaiming the range high at $17.67. A higher high above this level would invalidate the bearish thesis. 

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