Chainlink’s NVT Ratio Dropping — Has LINK Found the Bottom Now?

Chainlink’s Network Value to Transaction (NVT) ratio exhibited a decrease of 34% in the last 24 hours.

It shows a significant uptick in transaction volume relative to its market cap. This recent change has brought the NVT ratio down to approximately 90, from earlier values hovering around 120 to 130 in January.

Despite this, LINK’s price remains relatively flat, stagnating around the $18 mark.

This decrease in the NVT ratio, typically interpreted as the network being undervalued, suggests that Chainlink price is more actively utilized than it currently reflects.

Historically, such a scenario indicates a robust transactional utility that isn’t yet priced into the market valuation.

The price line, which has seen little movement upward despite increased transaction volumes, could be primed for a correction.

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As the NVT ratio continues to drop, indicating sustained or growing utility relative to the market cap, there could be potential for a bullish trend reversal if the market begins to recognize this value.

For investors, this could mean that Chainlink price is nearing a bottoming phase, making it a critical point for observation.

A sustained increase in utility without a corresponding price rise may eventually lead to a sharp correction upwards.

Chainlink Price Retesting Broken Descending Trendline

LINK price was retesting a descending trendline that previously acted as resistance.

The resistance traced from highs starting in 2021 and extending through 2024, indicates pivotal moments. That’s where LINK’s price trajectory was rejected downwards.

Currently, LINK trades just above this trendline at around $18, suggesting a potential shift from resistance to support.

Accompanying this price action was LINK’s price going slightly above the 50-day and 100 -day EMAs, at around $17.50.

This could serve as dynamic support to bolster bullish sentiments.

The conjunction of LINK’s price holding above the EMA and retesting the descending trendline provides a technically optimistic outlook.

Should LINK maintain support at these levels, it could catalyze a recovery phase. That will drive prices higher as it attempts to establish new supports.

Conversely, failure to hold these gains could see Chainlink price retreat to lower support levels. And possibly it would revisit lower bounds near $15.50, seen during recent pullbacks.

LINK Liquidation Heatmap

Analyzing the LINK liquidation heatmaps, there’s a notable trend in the recent data that underscores a potential shift in market sentiment towards stability.

Chainlink price key levels where significant short liquidations occurred, particularly at prices around $19.14, as indicated by the sharp increase in orange bars.

This surge in short liquidations could imply a strong resistance turned support level, signaling a potential reversal or stabilization of prices.

Notably, the two-week liquidation marked increase in activity near the $18 to $19 price range, which aligned with periods of heightened trading volume.

This cluster of activity could indicate significant market interest in maintaining price levels above this range, possibly marking it as a bottom.

This suggest a robust defense against price drops below $18, with cumulative liquidations tapering off as prices approached this threshold in recent days.

This pattern could suggest that Chainlink price is potentially bottoming out.

That would set the stage for a recovery if market conditions remain favorable and external factors do not induce further volatility.