Chainlink Price Struggles Below $18, But Recovery Likely

Chainlink (LINK) price has dropped below the $18 support level, raising concerns among traders about a possible decline to $12-$14.

However, historical market data indicates that the cryptocurrency could be approaching a rebound phase.

The Market Value to Realized Value (MVRV) ratio has reached a level where LINK has previously experienced price recoveries.

Chainlink’s Price Struggles Below Key Support

The price of LINK has been in a downward trend, currently trading around $17.76. It opened the day at $19.12, reached a high of $19.20, and dropped to a low of $17.28.

The asset has been unable to regain momentum after falling from its late 2024 highs of approximately $28.

Market analyst Nebraskangooner noted that LINK has lost a key support zone between $18 and $19, increasing the chances of further downside.

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If it fails to reclaim this level, the next support zone is around $12-$14. The price also remains below the 200-day moving average, which suggests that bearish sentiment is still dominant.

A recent increase in selling volume further confirms that downward pressure is still present in the market.

MVRV Ratio Indicates Potential Price Rebound

Market analyst Ali  indicates through on-chain data that LINK could be approaching its potential recovery range.

According to the MVRV (Market Value to Realized Value) ratio LINK stands at -16.3% which represents historical periods of strong price recovery for the token.

Analysis by Ali indicates that LINK experienced significant price increases when MVRV dipped below -16% previously because it gained 312%, 64%, 61%, 25% and 52%.

LINK is expected to recover similarly in upcoming weeks if its current price trend continues.

Liquidation Data Reflects High Volatility

Coinglass provides total LINK liquidation data through its chart which reveals peaks of market instability.

Data showed that long liquidations reached their highest point during December as well as late January.

The price volatility caused traders to close positions they held with leverage after market values dropped brutally.

The price collapses resulted in liquidation of numerous LINK holders who maintained long positions during these times.

Short liquidations occurred more often throughout the time period that included late November and early December.

Chainlink faced price surges which caused short traders to have to sell their positions.

The market price rise caused bettors who expected more price drop to purchase back their positions resulting in financial losses for them.

Major price fluctuations during early December and late January corresponded to the biggest liquidation events.

A group of traders holding large positions at high levels of risk face the danger of fast price movements which often triggers massive liquidations.

Recent declining liquidation levels did not impact the widespread use of high leverage trading positions which exposes the market to unexpected price fluctuations.

Another surge of long and short liquidations would create an indication that significant price movements are upcoming.

Market momentum tends to shift based on trader monitoring of liquidation trends.

Chainlink Price Technical Indicators Show Oversold Conditions

Technical charts indicate LINK approaches an area that may trigger a market reversal.

The Relative Strength Index (RSI) currently stands at 37.12 as it approaches critical oversold value under 30.

The Money Flow Index points to LINK being oversold with a value of 28.26.

Chainlink shows potential for price recovery between $20-$22 if it remains above $17.50 support. 

If the price drops below this support level it will find its next significant support zone at $12 to $14.