Chainlink price has crashed this week, but catalysts point to an eventual comeback in the next few weeks. The LINK token dropped below the key support at $20 for the first time since Monday, as most coins retreated. It has fallen by over 37% from its highest level this year.
Link Balances on Exchanges Are Falling
One potential catalyst for the LINK price is that exchange balances have continued falling this week. According to CoinGlass, these balances dropped from 157.6 million to 147 million, the lowest level since December 13.
However, a sharp decline in exchange balances is a positive sign for cryptocurrencies and that investors are no longer selling. Investors sell their coins by moving them from self-custody wallets to exchanges like Binance and Kraken.
A drop in exchange balances shows that whales have continued accumulating the LINK tokens. According to Santiment, the whales made almost 1,700 transactions on Tuesday as the coin dropped, the biggest increase since 2023.
These whales are likely buying Chainlink because of its strong fundamentals. First, LINK has a staking yield of 4.32%, higher than most popular networks like Ethereum and Solana. Over 40.8 million LINK tokens have been staked.
Second, Chainlink is the biggest player in the Oracle industry, and its total secured value (TVS) has jumped to almost $40 billion. It powers some of the biggest platforms in the crypto industry, such as AAVE, Spark, Compound, Usual, GMX, Liquity, and Benqi.
Third, the ongoing Real World Asset (RWA) tokenization industry may benefit Chainlink’s price. Analysts believe the sector will continue doing well as demand rises, with firms like Apollo, Franklin Templeton, and Blackrock fighting for the pie. Chainlink has a significant role to play in all this.
Chainlink Price Forecast
The weekly chart shows that the LINK price formed a cup and handle pattern. The upper side of the cup is at $22.86, and it forms between March and November 2024. LINK has formed a bullish flag pattern, a popular continuation sign.
Chainlink has held steady above the 50-week Exponential Moving Average (EMA), a bullish sign in the market. The recent retreat is part of the formation of the handle section.
Therefore, the Chainlink price will likely continue rising as bulls target the key resistance level at $37.85. This price target is established by measuring the cup’s depth and then the same distance from the upper side of the cup. It is about 95% of the current level.
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