Chainlink Traders Capitulate After 10% Plunge: Bottom Here?
July 10 2024 - 5:30PM
NEWSBTC
On-chain data shows that Chainlink investors have been realizing
significant losses recently, a sign that the price plunge has put
fear into their minds. Chainlink FUD Could Lead Towards Bottom
Formation According to data from the on-chain analytics firm
Santiment, LINK investors have just shown their largest
capitulation event of the year. The indicator of relevance here is
the “Network Realized Profit/Loss,” which keeps track of the net
amount of profit or loss that Chainlink traders are realizing right
now. The metric works by going through the blockchain history of
each coin sold to see what price it was moved at before this. If
this previous price for any coin was less than the spot price it’s
being transferred at now, then the coin’s sale is realizing some
profit. Related Reading: Bitcoin Now Forming Pattern That Last Led
To It Blasting Off Similarly, transactions of coins of the opposite
type would lead to loss realization instead. The indicator adds up
these profits and losses for the entire network and then calculates
their difference to find the net situation. When the value of the
Network Realized Profit/Loss is positive, it means the investors as
a whole are realizing profits. On the other hand, the negative
metric suggests that loss-taking is the dominant form of selling in
the market. Now, here is a chart that shows the trend in the
Chainlink Network Realized Profit/Loss over the past few months: As
is visible in the above graph, the Chainlink Network Realized
Profit/Loss has seen a negative spike recently, suggesting that
LINK investors have realized some large losses. This significant
loss-taking spree from the LINK traders has come as the
cryptocurrency’s price has gone through a significant drawdown over
the past few weeks. The coin is down almost 10% in the last seven
days alone. Given this timing, it would appear that these investors
have been scared by the bearish price action so much that they have
decided to exit the market at a loss. In the same chart, the
analytics firm has also attached the data for another metric, the
Age Consumed, which keeps track of whether dormant coins are
moving. Related Reading: Solana Mirroring 2021 Bullish Pattern,
Crypto Analyst Reveals It would seem like this indicator also
spiked alongside the loss-taking from the investors, implying that
even some holders previously sitting tight have been shaken out by
the price plunge. This FUD in the market can benefit Chainlink, as
historically, the asset has been more likely to bottom out when
fear is ripe among the investors. As Santiment highlighted in the
graph, a red spike in the indicator also proved bullish for LINK in
April. LINK Price Chainlink is trading around $12.8 when writing,
down around 3% over the last 24 hours. Featured image from Dall-E,
Santiment.net, chart from TradingView.com
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