Chainlink (LINK) Market Analysis: Will the Token Break Free from Its Critical Support Level?

Chainlink (LINK) experienced a significant drop, falling 8.91% to $13.09 on July 4. This decline reduced its market cap to $7.96 billion and accompanied

Chainlink (LINK) price dropped significantly on July 4, falling by 8.91% to trade at $13.09. This brought its market capitalization down to $7.96 billion. The token also experienced a growth in trading volumes, which rose by 101.68%, indicating a strong conviction behind the ongoing selloff.

Chainlink (LINK) Price Analysis

On the 1-day price chart, LINK has been consolidating within a well-defined range, with the upper resistance level situated near $22 and the lower support around $7.22. The token’s price currently hovers close to the support region, which is highlighted in purple on the chart, presenting a critical decision point for the market.

The 50-day Exponential Moving Average (EMA) is positioned at $15.02, while the 200-day EMA can be found at $15.24. As LINK continues to struggle to break above these EMAs, it faces increasing bearish pressure. Should the token fail to move above these levels, we can expect to see further price drops.

The Relative Strength Index (RSI) is indicating a reading of 38.04, suggesting that LINK is approaching oversold territory. This could lead to a potential price rebound from LINK’s current support levels.

For Chainlink (LINK) to regain bullish momentum, it must successfully break above the $15.00 resistance level, which aligns with the 50-day EMA. If the token manages to close above this level, it could attract more buyers, pushing the price towards the next resistance at $22.00.

On the other hand, failure to hold the current support level around $13.00 could lead to a retest of the $7.23 support, which has historically attracted strong buying interest. The Moving Average Convergence Divergence (MACD) is showing signs of a potential bullish crossover, further supporting a positive outlook.

Whale Accumulation Signals Bullish Trend

On-chain analytics firm Lookonchain reported that around 54 newly created wallets withdrew approximately 2.08 million LINK tokens from Binance over the past week. These tokens are valued at $30.28 million. Lookonchain suggests that this significant accumulation is likely being executed by whales and institutions, as the tokens are being moved out of the exchange.

Data from Santiment also corroborates this trend, showing a steady increase in the total amount of Chainlink (LINK) holders since early 2024. Despite a sharp drop in mid-May, the number of holders quickly recovered and continued to climb, reaching approximately 721,000 by June 4, 2024. Concurrently, transaction volumes have shown significant spikes, suggesting increased trading activity during periods of price movement.

According to data from IntoTheBlock, the market value to realized value (MVRV) ratio, a key metric for assessing market sentiment, shows LINK hovering around the $15 mark. This ratio, coupled with the recent accumulation by whales, supports a bullish outlook for the token.

Analysis of LINK’s global in/out of the money (GIOM) distribution further illustrates market dynamics. Addresses holding LINK at an average price of $2.51 number 42,837, while 86,044 addresses hold LINK at an average price of $5.98. These figures indicate significant holding levels that could influence market movements.

Michaël van de Poppe, a crypto analyst, highlighted that LINK has been following a pattern of six months of downward movement followed by six months of a bull market. He pointed out that LINK is currently in the latter phase, slowly grinding upwards, suggesting positive times ahead for the cryptocurrency.

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