- LINK has seen massive drawdowns, which could trigger trend reversal.
Price chart analysis supports a trend reversal scenario, but whale interest was mixed.
As an analyst with over two decades of experience in the crypto market, I have seen my fair share of bull and bear markets. The current state of Chainlink (LINK) presents a unique opportunity for investors who can navigate the turbulent waters of the digital asset space.
Negative market sentiment has dragged Chainlink [LINK] to short and long term trend lows, marking massive discounts for the altcoin. According to Santiment data, the drawdowns justify grabbing the discount.
As a researcher studying historical market trends, I’ve observed an interesting pattern: when there seems to be a lot of ‘financial bleeding’ among traders, it might suggest that investing in their struggling positions could potentially yield returns. This doesn’t necessarily mean I’m seeking to capitalize on others’ misfortunes, but rather, I’m looking for opportunities that may arise from market corrections or periods of widespread selling.
As an analyst, I utilized Santiment’s approach that centered around the MVRV (Market Value to Realized Value) ratio for my analysis. This crucial metric offers insights into a token’s current valuation. If the resulting value turns out to be negative, it indicates that the token might be undervalued, making it an attractive investment opportunity.
However, a positive value denotes a token is overpriced and could tip holders to sell for profit.
For LINK, the MVRV ratio was down 11% and 18.7% on the monthly and yearly adjusted basis. That means LINK was in a great buy position for short and long-term investors.
So, does the price chart position also support a buy idea for LINK?
LINK price analysis
In the beginning of 2024, the price of LINK surged by a remarkable 87%, climbing from $12 to $22. This means that those who held onto it during the initial three months of the year earned approximately double their investment, or 1.8 times their original return.
Nevertheless, it wiped out all data in Q2, and a subsequent attempt to recover only worsened the situation. Currently, LINK is trading at $11.59 and appears to be heading towards its June low of $11.05.
Throughout this year, the $11 level has served as a significant support area where LINK‘s price often found a balance, according to the Santiment theory. For those looking for opportunities in swing trading, this zone might offer a promising entry point if they decide to take a long position.
If market sentiment improves, the immediate bullish target above $14 would offer a 30% return.
However, an extended weak sentiment could drag LINK below $10 and compound the market bloodbath.
Whale interest in LINK
Interestingly, a whale cohort was going long at the current lows and demand level.
Since the end of July, there has been a significant increase in the ownership of addresses containing between 1 million and 10 million LINK tokens (represented by blue). This accumulation peaked in August, leading to an aggressive buying spree. As a result, these addresses now account for approximately 19% of the total LINK supply.
It appears that the current selling pressure originates from accounts holding between 10K and 100K LINK as well as 100K to 1M LINK. Combined, these two groups account for roughly 20% of the total LINK supply, which is comparable to the group that is currently accumulating.
Analyzing Bitcoin‘s [BTC] potential future movement might influence whether Chainlink (LINK) can rebound from its current demand zone, priced above $11.
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2024-08-05 00:07