Here’s why Chainlink’s 30% price dip may not be LINK’s bottom

Key Takeaways

What does the recent withdrawal of 63 million LINK tokens from exchanges suggest? 

It indicates accumulation and rising demand, despite bearish price action.

Why is Chainlink’s recovery uncertain despite positive sentiment and partnerships?

Profit-taking during minor price bounces signals weak bullish conviction and potential continuation of the downtrend.

Over 63 million Chainlink [LINK] tokens were withdrawn from exchanges over the past month, revealed crypto analyst Ali Martinez in a post on X (formerly Twitter).

The movement of tokens out of exchanges generally indicates accumulation and demand.

Social Volume was high, and positive weighted sentiment showed engagement was bullish overall. The 78K LINK addition to the growing Chainlink Reserve was another encouraging factor.

However, the price action remained bearish in recent weeks. Since the start of October, LINK has shed 30.1% in value, falling from $22.58 to $15.77. A recent price bounce ran into profit-taking pressure, which was a worrying sign for the bulls.

Chainlink faces a tough road toward recovery

Source: Glassnode

On the 10th of November, LINK prices had rallied to a high of $16.65. This bounce began a few days earlier, and short-term bullish momentum was maintained over the weekend.

Interestingly, the LINK Net Transfer Volume to/from exchanges had been negative for the majority of the past month. During the price bounce from $14.4 to $16.65, a 15% move, the LINK net transfer volume moved from negative to neutral territory.

In other words, transfers from exchanges dominated until a week ago, but the recent price bounce triggered selling from holders.

This shift is reflected in both the chart and Chainlink’s exchange inflow volume.

Source: Glassnode

The Coin Days Destroyed metric also peaked on the 10th of November, another sign of on-chain selling during the price bounce. Together, it showed profit-taking activity from holders.

Despite the positive developments, such as the stream of partnerships and collaborations with established financial entities, the willingness from holders to book profits on a meager bounce was telling.

It showed that the current bearish price trend could continue, especially if the $15.45 support level is lost to the sellers.