Chainlink Shows Strong Accumulation Signals as LINK Exchange Liquidity Dwindles

Chainlink (LINK) has faced persistent selling pressure, with its price struggling to stay above $13. Analysts express caution as additional downside may be on the horizon. However, on-chain data indicates a positive shift, highlighting accumulation activity even amidst price declines. Significant outflows from exchanges suggest holders are converting LINK to long-term storage. The technical outlook reinforces this trend, with LINK testing crucial support levels.

Key Takeaways

Current Price Pressure: LINK struggles to maintain its value above $13, indicating a fragile market sentiment.
Positive On-Chain Signals: Despite declining prices, accumulation activity suggests significant buying interest exists beneath the surface.
Exchange Withdrawals: Large outflows from exchanges highlight a shift towards long-term holding rather than selling.
Technical Support: LINK is resting on a long-term bullish trendline, with crucial support found around the $12–$13 range.
Stabilizing Volume: Recent lower sell volumes indicate a potential shift from distribution towards price stabilization.

Current Market Conditions for Chainlink

Chainlink is currently experiencing sustained pressure as its price hovers below the significant $13 mark. Despite several attempts to gain bullish momentum, these efforts have consistently met resistance, leading to a cautious outlook among traders. Many analysts suggest that LINK may see further declines before a more robust recovery can take place.

However, recent on-chain data tells a more complex story. Analysts from CryptoQuant, under the name CryptoOnchain, highlight that there's an interesting alignment between on-chain metrics and overall market structure, indicating a rise in accumulation at present price levels. While the price remains stagnant, it seems that larger market players are quietly accumulating LINK rather than selling their assets.

This discrepancy between declining prices and improving on-chain metrics is a common occurrence during market transitions when selling pressure begins to ease, though confidence hasn't yet fully returned. CryptoOnchain points out that indicators observing exchange flows and holder behaviors reveal significant interest in buying, despite LINK's challenges in attracting speculative interest.

Accumulation Signals from Exchange Data

Investigations into Chainlink's recent on-chain and technical dynamics reveal a significant change with respect to exchange netflows. The latest data from the Binance Altcoins Token Netflow for the past week shows that LINK has seen nearly $50 million in withdrawals from Binance alone.

This figure stands out in comparison to other large-cap alternative cryptocurrencies like Uniswap (UNI) or The Sandbox (SAND), which have not experienced significant capital movements during the same timeframe.

Binance Altcoin Token Netflow USD | Source: CryptoQuant

Typically, in on-chain analysis, substantial and sustained withdrawals from exchanges are interpreted as a sign of diminishing immediate selling pressure. This trend suggests that holders are moving their LINK tokens into self-custody or long-term storage instead of preparing to sell, indicating a possible shift towards holding behavior often associated with accumulation.

Further supporting this finding, the technical analysis of LINK reveals that it is currently resting on a long-term bullish trendline that has provided dynamic support since 2020. Historically, this trendline has successfully attracted demand and curbed deeper price corrections during downturns.

The combination of heavy exchange outflows alongside a retest of this critical historical support level indicates a promising signal of accumulation by savvy investors. It suggests that many larger players consider current prices as a strategic entry opportunity. Maintaining this support level is crucial; if successful, it could preserve Chainlink's long-term bullish structure and enhance the likelihood of a trend reversal in the future.

LINK's Testing of Historical Demand Levels

Chainlink (LINK) remains under pressure, with its price hovering around $12.50 on the 3-day chart after undergoing an extended corrective phase. The technical analysis illustrates a clear loss of bullish momentum, especially after unsuccessful attempts to break above the $20-$25 range earlier in the cycle. Since hitting that peak, LINK has created a pattern of lower highs, confirming the ongoing medium-term downtrend.

LINK Testing Key Price Level | Source: LINKUSDT Chart on TradingView

From a technical standpoint, LINK currently trades below both its short- and medium-term moving averages, which have rolled over and are now acting as dynamic resistance. The 50-period moving average sits well above the current price, reinforcing that recent rebounds appear to be corrective rather than trend-inducing.

Conversely, the longer-term moving average is flattening and moving closer to the current price, hinting at a potential slowdown in selling pressure as the price approaches historically significant zones.

The $12-$13 range serves as a crucial support area, having acted as a pivot numerous times over the past two years, repeatedly attracting buying interest during periods of wider market weakness. The fact that LINK appears to be consolidating rather than aggressively breaking down indicates that sellers may be losing their momentum.

Transaction volume further supports this outlook. While earlier sell-offs in the year were marked by sharp increases in volume, recent trading has shown reduced activity, suggesting that a period of distribution is possibly transitioning to stability. For LINK to signal a meaningful reversal in trend, buyers need to reclaim the $15-$16 price zone.

Featured image from ChatGPT, chart data from TradingView.com.