Understanding the Recent Chainlink (LINK) Price Surge
Chainlink (LINK) has demonstrated impressive growth over the past year, with its price surging by more than 109%. Notably, in the last three months, LINK has risen 68.5%, becoming one of the standout performers in the cryptocurrency market. However, recent trends indicate that the robust momentum may be slowing, raising questions about a potential market reversal for this popular altcoin.
Signs of Exhaustion in Chainlink’s Price Rally
While LINK’s year-long performance has been strong, the last week’s dip of over 9% signals possible exhaustion in its bullish trajectory. On-chain metrics and technical charts are further beginning to align with these signs.
As of August 29, 87.4% of the circulating supply of LINK is in profit, which is close to the peak of 97.5% recorded earlier in the month. Historical data suggests that such peaks in supply in profit typically precede notable corrections.
For example, LINK corrected by over 6% after rallying to $26.45 earlier in August and experienced a 19% dip in July when similar profit-taking patterns emerged. Currently, with a supply in profit near historically high levels, the risk of another market correction is high.
Technical Indicators Suggest Possible Reversal
The Chaikin Money Flow (CMF), a tool used to measure capital inflows and outflows, has added weight to bearish predictions. Since August 22, the CMF has been trending downward and slipped into negative territory on August 29, reflecting diminishing buying pressure and fading interest from investors.
Another warning sign comes from the price trading within an ascending broadening wedge pattern. Often described as a “megaphone” pattern, this structure tends to signal the end of a bullish cycle, with increased odds of a bearish reversal.
Key Levels to Monitor in LINK’s Price Action
Currently trading at $23.31, LINK faces critical support at $22.84. A decisive break below this level could pave the way for additional declines, with the next target at $21.36. Breaching this range could lead to a further correction of 6%–19%, matching previous patterns during local “supply in profit” peaks.
Conversely, LINK could reclaim bullish sentiment by breaking above $25.96, with a potential upside target of $27.88. However, sustained momentum above these levels is essential to alleviate broader exhaustion signals.
What This Means for Investors
For those considering entering the LINK market, this could be a time to adopt caution. While LINK’s recent performance has been exceptional, current market indicators suggest volatility and correction risks in the short term.
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Conclusion
Although Chainlink remains a strong contender among cryptocurrencies, the potential for a near-term pullback cannot be ignored. Whether you’re actively trading or observing the market, staying updated with technical and on-chain insights will be crucial to making informed decisions. Diversifying your portfolio or simply exercising caution as volatility looms can help ensure a balanced strategy.
