Assessing Chainlink’s [LINK] Potential for a Short-Term Breakout
Chainlink [LINK] has experienced a 25% decline over the past two weeks, raising concerns among investors about its short-term and long-term prospects. This sharp decrease has led to questions about LINK’s potential for a breakout in the next 30 days.
Odds of a Rally Are Low
Upon examining LINK’s trading chart from the past month, we noticed the presence of a double-bottom pattern, a bullish indicator typically suggesting a reversal. Despite this, LINK’s price remains close to or below the lower Bollinger Band, indicating significant bearish pressure and potential oversold conditions that might attract buyers back into the market.
The technical analysis reveals that the 50-day moving average (MA) has crossed below the 200-day MA, forming a “death cross” which signals a bearish market outlook and possible further declines. The Relative Strength Index (RSI) values have consistently stayed below 60, frequently hovering around the midline (50), suggesting bears are maintaining control. The absence of sustained movement above 60 confirms the lack of bullish momentum in the short term.
LINK is Stuck with the Bears
LINK’s price has tested and briefly breached the previous support level of around $13.50 but failed to hold due to continuous bearish pressure. The price action staying below the Ichimoku Cloud further indicates a strong bearish trend. This is reinforced by the Moving Average Convergence Divergence (MACD) line being below the signal line and close to the zero line, signaling no immediate signs of recovery.
Currently, only 37% of LINK holders are in profit, while a majority (54%) are out of the money. This has increased selling pressure as investors aim to minimize losses. An analysis by AMBCrypto of IntoTheBlock data showed that exchange inflows are lower than outflows ($35.48 million vs. $36.54 million), indicating more LINK is being moved off exchanges, potentially for holding in private wallets. This suggests accumulation, which is typically a bullish sign.
Long-Term Potential Despite Short-Term Challenges
While a breakout for LINK in the next 30 days appears unlikely due to the prevailing bearish indicators and market conditions, its long-term potential remains strong. The ongoing accumulation could signal future bullish momentum once the current bearish trend subsides.