Is Chainlink (LINK) Sliding To $9? On-Chain Metrics Expose Weak Network Activity
September 04 2024 - 2:30PM
NEWSBTC
Chainlink (LINK) is at a crucial level after a sharp 22% retrace
from recent local highs, sparking concern among investors and
analysts. The recent downturn is compounded by unsettling on-chain
data that suggests Chainlink’s network activity may weaken, adding
to the uncertainty surrounding the asset. This decline in activity,
coupled with broader market volatility, has heightened fears of
further losses. Related Reading: Chainlink (LINK) Could Drop
To $8 If It Loses Current Support: On-Chain Data Reveals If the
current bearish sentiment persists, LINK will likely test the next
significant demand level around the lower $9 mark. This level is
critical for determining the asset’s short-term future. A break
below could signal deeper declines, while a successful defense
might provide a foundation for recovery. Investors are closely
watching these developments, as the coming days will be pivotal for
Chainlink’s price direction and overall market sentiment. Chainlink
Driven By Low Network Activity Chainlink (LINK) has recently faced
significant selling pressure driven by more than just market
speculation. A decline in network activity also plays a crucial
role in the ongoing bearish trend. According to key data from
Santiment, the price-Daily Active Addresses (DAA) divergence
currently stands at -56.35%. This negative divergence suggests a
disconnect between Chainlink’s price and user engagement, signaling
potential trouble. The DAA metric is vital for understanding
whether network activity supports price movements. Generally, when
active addresses, which measure user participation on a blockchain,
increase with the price, it indicates strong underlying demand. It
can suggest that the cryptocurrency is poised for higher values. On
the other hand, if network activity rises while the price declines,
it often presents a buying opportunity, signaling that the market
may soon reverse. Related Reading: Can Avalanche (AVAX) Reclaim
$30? Top Analyst Predicts A Dip Before A Bounce However, the
current decrease in DAA for Chainlink paints a less optimistic
picture. This drop indicates that user engagement isn’t supporting
recent price action, a typically bearish factor. An increase in
network activity is essential for LINK to see any meaningful
consolidation and potential recovery. Without a corresponding rise
in DAA, the cryptocurrency may struggle to break free from its
current downtrend. Investors are closely monitoring this metric, as
a continued decline in network activity could lead to further
downward pressure on Chainlink’s price, possibly pushing it toward
lower support levels. LINK’s $9 Lifeline Chainlink (LINK) is
currently trading at $10.24, following a dip below the August 16
low of $9.92. LINK quickly recovered after briefly touching $9.84,
signaling demand at this level. However, despite this bounce, LINK
remains below the 4-hour 200 moving average (MA), a critical
technical indicator currently at $10.80. Analysts see this MA as a
key level, and a successful move above it could indicate a shift in
momentum, potentially pushing LINK toward the next resistance at
around $11.50. Conversely, if LINK fails to hold its current
position and slips further, a deeper correction could drag the
price to sub-$9 levels. This would signal continued bearish
pressure, with traders and investors closely monitoring the price.
LINK’s ability to reclaim the 200 MA or break below its recent lows
will be crucial in determining its next significant move. Related
Reading: Toncoin (TON) Price Action Signals 30% Crash After Losing
A Key Level Featured image from Dall-E, chart from TradingView
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