Exploring Chainlink's recent market trends, including Dormant Supply decrease and Sentiment dive.
Chainlink (LINK) saw marginal growth of just 1% over the last month, marking a noticeable deviation from the overall market trend, which saw record highs during the same period. Concerningly, a significant decrease in Dormant Circulation Supply combined with an all-time low in Weighted Sentiment provides insights into the prevailing market sentiment and potential future trajectories.
In this article, we delve into the implications of these crucial metrics, analyze the existing levels of price support and resistance, and offer a reasoned forecast on Chainlink's future price trajectory.
Impact of the 180-Day Dormant Supply Drop on Chainlink Price
Between February 6 and March 3, Chainlink's Dormant Circulation Supply over a 180-day period surged from 257,000 to 714,000. This significant uptick indicates either a strong accumulation phase or sustained holding among investors, suggesting a collective belief in future price appreciation or confidence in LINK's long-term value.
The behavior implied by this metric during this period reflects bullish sentiment, with investors showing a preference for holding rather than selling, indicating expectations of potential gains or trust in Chainlink's fundamentals.
However, the narrative shifted dramatically on March 6, as Dormant Circulation Supply witnessed a steep decline from 570,000 to 70,200, marking an 87.68% decrease. This sudden drop suggests that a substantial amount of previously inactive LINK was suddenly activated, indicating a significant shift in investor sentiment or market dynamics.
The concept of Dormant Circulation Supply, especially over a 180-day period, offers profound insights into the behavior of long-term holders in the cryptocurrency space. However, the sudden drop on March 6 could lead to increased selling pressure in the market.
Considering that Chainlink's growth lags behind other cryptocurrencies, long-term holders represented by Dormant Supply (180d) might be selling their LINK to secure liquidity for better opportunities in the market.
Chainlink Sentiment Reaches New Lows
The Weighted Sentiment metric for Chainlink has hit a striking low, plummeting to -1.265. This represents the most significant bearish sentiment in the Chainlink community since July 2023.
Weighted Sentiment evaluates the overall market mood regarding Chainlink, taking into account the balance of positive and negative discussions across social media platforms. A negative score, especially as low as -1.265, indicates prevailing bearish sentiment, possibly driven by uncertainties or critical views on Chainlink's prospects.
The Weighted Sentiment metric serves as an early warning for investors, often signaling shifts in market dynamics. Such negative sentiment, combined with a notable decline in Dormant Circulation Supply, paints a bearish to neutral outlook for LINK.
LINK Price Prediction: Is $22 Feasible?
Based on the "Global In/Out of the Money" chart for Chainlink, we can assess current sentiment and potential price movements, leaning towards a bearish to neutral outlook. The chart indicates that a majority of addresses are "In the Money," representing 67.16% of total LINK holders, while a smaller fraction is "Out of the Money" and a minuscule portion is "At the Money."
Notably, LINK has established strong support between $15 to $18.50, indicating potential buying activity if the price dips into this range. Conversely, a significant resistance zone between $19.75 to $26.75 suggests selling pressure as the price approaches these levels.
For a reversal from the current bearish to neutral stance and a push towards $22, LINK would need to maintain support levels and gradually build momentum to overcome resistance.