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Decentralized oracle network Chainlink has dropped nearly 40% over the past month, leaving investors wondering if a rebound might be on the horizon.
Chainlink fell significantly in yesterday's trading session, dropping from highs of $19.20 to $17.28 before slightly reversing losses in today's session. At press time, Chainlink (LINK) was up 0.06% in the last 24 hours to $18.05.
According to Ali, a crypto analyst, the recent Chainlink price correction, which has seen it decline nearly 40% in the past month, aligns with a network contraction, signaling a slowdown in activity for Chainlink. The Chainlink LINK network has been contracting since Nov. 30, indicating a slowdown in activity.
The price drop is also reflected in the MVRV ratio, which measures trader profitability. Right now, those who bought LINK in the last 30 days are sitting at an average loss of -16%. This is a level that has historically marked selling exhaustion points.
Tomiwabold OlajideThe larger crypto market saw mixed price action in the early Wednesday trading session, but the majority of crypto assets were in the green at press time. Investors are anticipating the FOMC meeting minutes from January, set to be issued on Wednesday at 2:00 p.m. ET, which will provide fresh insights into monetary policy and how long the Fed will continue to keep interest rates steady.
Is rebound on horizon?
In an earlier tweet, Ali indicated that Chainlink (LINK) has historically rebounded when the MVRV drops below -16%, with past gains of 312%, 64%, 61%, 25% and 52%. MVRV is currently at -16.3%, which could indicate another comeback on the horizon.
Meanwhile, whales are buying Chainlink's recent price dip. Ali observed that over the last 24 hours, whales have bought over 1.10 million Chainlink worth more than $20 million, which is an early sign of confidence returning.
However, for Chainlink to confirm a rebound, it must break past $19 to target $23.70. Amid the current market uncertainty, the $15.50 level remains key to watch, as losing this support could invalidate the bullish outlook and trigger a steeper correction.
That said, the most critical support level for Chainlink is at $15.50, while key resistance levels to watch are $19 and $23.70. A breakout or breakdown from these levels could set the trend for Chainlink's next price move.
Dan Burgin
Vladislav Sopov