Chainlink’s price may decline as investor optimism fades. The emerging downtrend could be due to minimal network activity compared to its valuation. Chainlink’s struggle to surpass a significant resistance level is crucial for investors. Since the end of July, LINK holders have experienced a significant rise despite selling pressure.
What’s Happening with Chainlink?
This process prevented the altcoin from losing significantly and also pushed its price up in mid-August. However, this strong optimism is now starting to wane. Despite the recent price increase, the weighted sentiment for LINK is consistently dropping. Currently, it remains above the zero line, indicating that there is still positive sentiment among holders.
One of the key indicators of this change in sentiment is the NVT (Network Value to Transactions) ratio. This ratio is currently at a four-year and eight-month high, last seen in January 2020. The NVT ratio is a metric used to evaluate an asset’s valuation based on its transaction activity.
The rising NVT ratio indicates that LINK is overvalued compared to its actual network activity. This could suggest that the price has gone far beyond the fundamental elements. As bullish sentiment decreases and the NVT ratio remains high, LINK investors may need to be prepared for potential price corrections.
LINK Chart Analysis
Chainlink’s price at $12.00 aims to turn the $12.35 resistance into a support level. This level has been tested multiple times as a turning point, and recovery above this level is crucial for LINK. However, mixed signals from the network and LINK holders suggest a different path.
Chainlink’s price may be recording a decline towards the local support base of $10.79. Although a drop below this level seems unlikely, unfortunate conditions could send the altcoin to $10.00. This could erase the 22% recovery recorded in mid-August. However, if the altcoin maintains its upward momentum and bounces off the $10.79 support, it could surpass $12.35. This could lead to a rise above $13.00, invalidating the bearish thesis for Chainlink’s price.
