Chainlink’s Price Struggles: Whales are Positioning, Not Panicking

Chainlink (LINK) is facing challenges with its price, yet significant investors, known as whales, are making strategic moves rather than reacting emotionally. A notable whale recently withdrew 404,000 LINK from Coinbase on January 19, taking about $5.5 million out of immediate circulation. This particular address has been steadily accumulating 3.32 million LINK at an average price of around $15.56 over the last four months. This accumulation stands in stark contrast to the current price weakness. Whales typically operate on a longer time frame, focusing on zones where fear dominates the market sentiment, and their withdrawals from exchanges can create a scarcity of supply.

Key Takeaways

Large whales are continuing to accumulate Chainlink (LINK) despite recent price challenges.
LINK remains confined within a descending price channel, with current support and resistance levels.
Exchange withdrawals persist, reflecting ongoing accumulation versus panic selling.
Decreasing Open Interest indicates unwinding of leverage rather than aggressive short selling.
The derivatives market shows neutral sentiment, lacking strong directional conviction at the moment.

Chainlink's price struggles - But whales are positioning, not panicking

At the moment, retail investors are showing caution, and this accumulation pattern indicates confidence rather than speculation, although it doesn't guarantee immediate price rebounds.

LINK Remains in a Descending Channel

Chainlink's price action is currently confined within a well-defined descending channel on the daily chart, following a brief upward attempt that ultimately failed. As of now, LINK’s price has slipped back into the channel after a temporary rise, reaffirming the ongoing corrective movement. Presently, the price hovers within the lower section of the channel, around $12.78, with support near $11.92 and resistance at approximately $14.69.

Despite being under pressure, buyers have not vanished; the price has been responding positively near support levels, indicating that demand is still present. The Relative Strength Index (RSI) has dropped to about 42.88, showing a weakening momentum rather than outright exhaustion. Therefore, while the market shows corrective tendencies, it is not fundamentally broken. A critical point for LINK will be reclaiming the midpoint of the channel to change the short-term outlook. Until that occurs, sellers will remain in control, although the downside seems limited at the moment.

Chainlink price action
Source: TradingView

Continuing Exchange Outflows Despite Price Decline

On January 19, data revealed LINK experiencing net outflows of approximately $2.55 million, even as its price stood at around $12.78. This negative net outflow continues a trend of withdrawals from exchanges noted in recent sessions. Interestingly, despite the downward price movement, LINK is consistently being taken off centralized platforms rather than being re-deposited. Daily net flows below zero affirm ongoing self-custody patterns among investors, highlighting a consistent outflow coinciding with the significant 404,000 LINK withdrawal from Coinbase.

This situation indicates that investors are positioning themselves strategically, rather than selling out of panic. The data reflects an underlying structure of accumulation beneath visible price weakness.

Chainlink exchange data
Source: CoinGlass

Open Interest Declines Amid Leverage Unwinding

Derivatives data indicates that Open Interest has decreased by about 8.6%, reaching around $582 million. This drop suggests that traders are exiting leveraged positions rather than aggressively building short positions. In typical bearish phases, Open Interest increases alongside falling prices, signifying a buildup of short positions. However, LINK's current scenario depicts a market where deleveraging is occurring instead of a substantial bearish stance.

Long positions appear to have closed after unsuccessful breakout attempts, and shorts have not aggressively entered the market. This reset in positioning can help stabilize price action and mitigate volatility risks. With reduced leverage, the risk of liquidation diminishes, allowing prices to stabilize near critical support levels. This environment seems more conducive to gradual accumulation rather than sharp price movements.

Chainlink leverage data
Source: CoinGlass

Funding Rate Shifts Negative as Conviction Dwindles

Recently, Chainlink's OI-Weighted Funding Rate dipped slightly into negative territory, resting near -0.004%. This change indicates that traders are becoming less confident in directional moves. While long positions are fading, shorts are also showing hesitation, creating a neutral to cautious sentiment in derivatives. The funding rate's decline aligns with falling Open Interest, reinforcing the deleveraging trend.

However, it's important to note that the funding has not plummeted into a deeply negative condition, which often signals overcrowded short positioning. LINK has avoided this state for now, meaning the market lacks strong directional conviction. This situation typically precedes periods of consolidation instead of continuation. Stabilization of the funding rate may support base-building, suggesting that a patient approach may be more beneficial than a hasty reaction.

Chainlink funding data
Source: CoinGlass

Conclusion

Currently, Chainlink finds itself at a crossroads between steady accumulation by whales and a decline in short-term momentum. Significant withdrawals from exchanges are decreasing the supply of LINK, while the price remains corrective and leverage levels are gradually unwinding. Data from derivatives markets reflect caution instead of outright bearish movements. As a result, LINK appears to be building a structural base rather than capitulating. If buyers can hold support in the descending channel, there is potential for recovery efforts. Until then, the market is in a phase of cooling, favoring patience over urgency.