Chainlink (LINK) is currently facing a critical juncture as it retraces 22% from recent local highs, causing concern among both investors and analysts. The on-chain data is also worrying, indicating a potential weakening of Chainlink’s network activity. Combined with overall market volatility, these factors are contributing to fears of further price decreases for LINK.
If the current bearish sentiment persists, the next key support level for LINK is expected to be around the lower $9 range. This level will be crucial in determining the short-term trajectory of the asset. A breach below this level could signal more significant declines, while a successful defense might act as a foundation for a potential recovery. Investors are closely monitoring these developments as they will heavily influence Chainlink’s price direction and overall market sentiment in the coming days.
Chainlink’s recent selling pressure is not just driven by market speculation but also a decline in network activity. Data from Santiment shows that the price-Daily Active Addresses (DAA) divergence for Chainlink currently stands at -56.35%. This negative divergence suggests a disconnect between Chainlink’s price and user engagement, hinting at potential issues.
The decrease in DAA is concerning as it indicates that user engagement may not be supporting recent price movements. An increase in network activity is crucial for Chainlink to consolidate and potentially recover. Without a corresponding rise in DAA, the cryptocurrency could struggle to break free from its current downtrend, leading to further downward pressure on its price.
Currently trading at $10.24, Chainlink has shown demand around the $9 mark after briefly touching $9.84. Despite this bounce, LINK remains below the critical 4-hour 200 moving average (MA) at $10.80. Breaking above this MA could indicate a shift in momentum, pushing Chainlink towards the next resistance level around $11.50.
On the flip side, failing to hold the current position and slipping further could cause a deeper correction and drag the price below $9. This would indicate ongoing bearish pressure, with traders closely monitoring the price action. The ability of LINK to reclaim the 200 MA or break below recent lows will be pivotal in determining its next significant move.
Crypto assets, including Chainlink, are highly volatile, and investing in them carries significant risk. Investors should be prepared to lose all the money they invest and should not expect protection in case of adverse outcomes. It is essential to understand and acknowledge the risks involved in crypto investing.