Chainlink price has crashed this week, but numerous 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 dropped 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. CoinGlass data shows that these balances dropped to 147 million, down from this year’s high of 157.6 million. It dropped to the lowest level since December 13.
A sharp decline in exchange balances is seen as a positive thing for a cryptocurrency since it is a sign that investors are no longer selling. Investors sell their coins by moving them from self custody wallets to exchanges like Binance and Kraken where they then sell them.
A sharp drop in exchange balances is a sign that whales have continued to accumulate the LINK tokens. Santiment data shows that the whales made almost 1,700 transactions on Tuesday as the coin dropped. That was 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, where its total value secured (TVS) has jumped to almost $40 billion. It powers some of the biggest platforms in the crypto industry like AAVE, Spark, Compound, Usual, GMX, Liquity, and Benqi.
Third, the ongoing Real World Asset (RWA) tokenization industry may benefit Chainlink’s price. Analysts believe that the sector will continue doing well as demand rise, with firms like Apollo, Franklin Templeton, and Blackrock fighting for the pie. Chainlink has a big 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 keep rising as bulls target the key resistance level at $37.85. This price target is established by first measuring the cup’s depth and then measuring the same distance from the upper side of the cup. The target is about 95% from the current level.
