Chainlink’s [LINK] price jumped 17% in the last 24 hours, making the cryptocurrency the best-performing altcoin within the period. But AMBCrypto’s investigation showed that the increase was not without cause.
Instead, there were some happenings behind the scenes that fueled the altcoin rally. Based on our findings, we confirmed that the influx of LINK tokens into the network circulation was one of the catalysts.
The slumbering wallets are awake
Santiment, in a post on the 1st of February, noted that about 5.38 billion coins in dormant wallets came alive. The rise of the wallets implied that the Age Consumed metric surged.
Furthermore, the spike in Age Consumed reflects how there was a short-term behavioral change in long-term holders. Also, it usually precedes market bottoms while leading to a bounce.
However, that was not the only reason. On-chain data also showed that some addresses liquidated their LINK holdings. Typically, this means that there was some level of Fear, Uncertainty, and Doubt (FUD) around the project. But FUD is not always a bad thing, suggesting that the action charged up the Chainlink token price.
LINK’s price at press time was $18.03, indicating the highest value it has reached in almost six weeks. Despite the hike, the Network Value to Transactions (NVT) Signal showed that the price might retrace soon.
According to AMBCrypto’s analysis of Glassnode data, Chainlink’s NVT Signal had climbed to 40.75. The metric uses a 90-day Moving Average (MA) to spot when investors are pricing at a premium or otherwise.
Historically, low NVT Signals serve as periods to acquire tokens, and they most time, coincide with market bottoms.
But when an NVT Signal is high, it means it could be time to distribute, and the market might have hit a local top. In Chainlink’s case, there is a chance that the price could slow down. If this happens, LINK might drop below $18.
LINK aims to cool down for a while
AMBCrypto’s analysis of the LINK/USD 4-hour chart showed that bulls capitalized on the support at $15. With increased buying pressure, the cryptocurrency was able to surge past the $16 resistance.
However, indications from the Bollinger Bands (BB) showed that LINK might have become overbought. This was because the upper band of the BB touched LINK’s price at $18. Though volatility increase, LINK had begun to pull back as the price dropped to $17.75.
The Relative Strength Index (RSI) also confirmed the sentiment as its reading was 77.01. Values of the RSI above 70 suggest that a token is overbought and could foreshadow a retracement.
If the reading was below 30, it would have been tagged oversold and might have triggered a rebound.
For the time being, LINK might drawback to $17.50. But a move below $17 seemed unlikely as buying pressure could help it eye $18 one more time.
Source : AMBCrypto by Victor Olanrewaju / Feb 2, 2024