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ChainLink (LINK) Cryptocurrency Entered Price Discovery Says Analyst, Big Upsurge Next?

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Sun, 02/23/2020 - 09:00
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  • ChainLink (LINK), a top 12 cryptocurrency by market cap, has entered price discovery, breaking past its record high

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ChainLink (LINK), a top 12 cryptocurrency by market cap, has entered price discovery. It recently surpassed its previous record high achieved in June 2019 at $3.8.

Price discovery in trading refers to when an asset surges past its recent high, targeting a new all-time high.

Where is the limit for ChainLink cryptocurrency?

Traders rely on support and resistance levels to evaluate the price trend of an asset. When there are no support and resistance levels as a cryptocurrency’s price enters a new range that has not been tested before, both upside and downside movements can be exaggerated.

For instance, when the bitcoin price surpassed the $10,000 level in 2017, it took merely three weeks for the price to double to $20,000.

But, because no support levels existed above $10,000 as it entered price discovery, the correction was intense and it plummeted by more than 70 percent within a span of two months.

In that regard, while price discovery could allow a cryptocurrency like ChainLink to see an over-extended rally, it also makes it vulnerable to steep pullbacks in the short-term.

Cryptocurrency trader Josh Rager said: “LINK Same as Tezos in price discovery. Can continue to pump but if it falls, LINK has limited support until under $3. I'd certainly start getting exposure by $2.84 and for some reason, if the price gets to $2.16, I'd buy more in that area.”

Traders remain cautiously optimistic on LINK and other cryptocurrencies that have entered price discovery like Tezos (XTZ), as they could demonstrate intense rallies off of the strength of bitcoin but can be exposed to sharp sell-offs.

ChainLink (LINK) breaks its record high an $4.5826
Source: Tradingview.com

Will bitcoin provide strength?

Typically, the alternative cryptocurrency (altcoin) market tends to prosper when bitcoin stabilizes and shows sideways price movement after a large upsurge.

As the momentum in the cryptocurrency market improves and bitcoin sees lower volatility, traders seek for higher-risk assets, turning to the altcoin market.

For cryptocurrencies like LINK, XTZ, and Ethereum to sustain their momentum after being the best performers in the recent rally, the bitcoin price has to defend key support levels.

At a macro view, top traders like Cred have noted that $9,550 remains as the break or make it level for the dominant cryptocurrency. If the bitcoin price closes its weekly candle on February 24 above $9,550, Cred explained that more upside movement heading into March is likely.

“Price up against Monday's high and current weekly open here at $9.9k. Again, as long as $9.5k weekly support and 1D bullish structure holds, I expect the party to rage on to the upside. $10.2k then $11k. Until $9.5k breaks on a 1D close, life is easier as a bull,” one cryptocurrency trader said.

About the author

Joseph Young is an analyst based in South Korea that has been covering finance, fintech, and cryptocurrency since 2013. He has worked with various recognized publications in both the finance and cryptocurrency industries.

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  • Ethereum and XRP would have to rebound to at least $150 to see any possibility of a major recovery.

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Following the near 10 percent decline in the bitcoin price on Saturday, the altcoin market has sharply plunged once again. XRP and Ethereum, in particular, are now down by 94 percent and 91 percent respectively from record highs.

The underwhelming performance of altcoins have led the valuation of the entire cryptocurrency market to drop by more than $100 billion since early March.

The Ethereum price has to surge by 20% or more to kickstart recovery
Source: Twitter.com @CryptoDonAlt

XRP and Ethereum see gloomy short-term trends

In recent weeks, the price of XRP has declined to levels unseen since mid-2017 despite substantially lower institutional sales of XRP by Ripple.

Throughout the past year, small market cap altcoins have generally followed the near-term price trend of XRP; when the price of XRP slumps, low market cap cryptocurrencies also tend to underperform.

The lackluster momentum of XRP and three consecutive lower highs at a macro level indicate that there is low demand from buyers to lead a strong recovery for XRP in the short-term.

While Ethereum has performed better than XRP since early 2020, it is seeing a similarly stagnant trend, influenced by the inability of bitcoin to break out of key resistance levels.

Prominent cryptocurrency trader DonAlt said earlier this week that the price of Ethereum would have to rebound to at least $150 to see any possibility of a major recovery.

He said:

“The USD pair looks even worse. ETH dropped by 90%+ and is now ranging putting in lower highs and lower lows. I like being bullish as much as the next guy but as long as ETHUSD is trading & closing below $150 I see little reason to expect higher prices.”

Currently, the price of Ethereum is hovering at $128, and it would need to see a 20 percent upsurge in the near-term to kickstart an extended rally.

Does the crypto market have any catalyst?

Whether key catalysts exist to trigger a 20 percent increase in prices across the cryptocurrency market remains unclear; especially as the level of fear towards the coronavirus pandemic continues to intensify.

As financial analyst Koroush AK said:

“Most businesses and individuals still have 1/2 months runway. Assuming handling the virus lasts several months not several weeks. Let's see how many want to be holding, let alone buying, bitcoin when struggling to pay bills and put food on the table.”

Technical analysts generally believe that for the altcoin market to see revived momentum in the upcoming weeks, bitcoin would have to show strength as a result of the global equities market bottoming out.

With second quarter earnings in the U.S. stock market yet to be released, analysts remain negative about the near-term trend of the stock market as well.

About the author

Joseph Young is an analyst based in South Korea that has been covering finance, fintech, and cryptocurrency since 2013. He has worked with various recognized publications in both the finance and cryptocurrency industries.

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