Why Chainlink's 30% Price Drop May Not Be the Lowest Point for LINK

Chainlink (LINK) has experienced a significant price drop of 30.1% since early October, leading to concerns about its recovery potential. Despite evidence of accumulation and a positive sentiment in the community, recent profit-taking activities suggest that the bearish trend may persist.

Key Takeaways

Accumulation and rising demand are suggested by recent token movements, despite ongoing price declines.
Minor price recoveries met with profit-taking indicate a lack of strong bullish sentiment and the possibility of continued downward trends.
Over 63 million LINK tokens were withdrawn from exchanges recently, a sign of accumulating demand, according to analyst Ali Martinez.
Social engagement metrics remained high, with a positive overall sentiment; the addition of 78K LINK to the Chainlink Reserve is notable.
Despite these positives, LINK's price has dropped from $22.58 to $15.77 since October, with ongoing selling pressure during price rebounds.

Chainlink sees historic exchange outflows, but profit-taking caps recovery hopes

Chainlink's Difficult Path to Recovery

Chainlink Net Transfer Volume
Source: Glassnode

On November 10th, LINK saw a price increase, reaching a peak of $16.65. This surge began a few days prior and enjoyed some short-term bullish activity over the weekend.

Interestingly, the LINK Net Transfer Volume to and from exchanges had predominantly been negative throughout the month. During the price recovery from $14.40 to $16.65, which marked a 15% increase, the net transfer volume shifted from negative to neutral. This indicates that, while transfers from exchanges were prevalent until recently, this price appreciation prompted selling from holders.

Chainlink Coin Days Destroyed
Source: Glassnode

The Coin Days Destroyed metric also peaked on November 10th, reinforcing the trend of selling activity on-chain during the price rise. Collectively, these indicators reflect profit-taking behavior from holders.

Despite Chainlink's numerous partnerships and ongoing collaborations with well-known financial institutions, the propensity for holders to take profits during a minor bounce is concerning. This behavior suggests that the bearish trend may persist, especially if the price dips below the $15.45 support level.