Chainlink Price Surge: Is a Correction on the Horizon?
Chainlink, one of the prominent altcoins in the cryptocurrency market, has experienced a remarkable price surge in recent days, bringing substantial profits to LINK holders. However, this impressive rally may be reaching its peak as experts suggest an imminent crash could be on the horizon.
Over the past three days, Chainlink price has surged by approximately 35%, catapulting it to a trading price of $10.15. The rally even continued on Monday, with an additional 8% increase during intra-day trading before a correction to the current trading price occurred.
While Chainlink’s price remains bolstered by the 50-, 100-, and 200-day Exponential Moving Averages (EMA), caution is warranted. The Relative Strength Index (RSI) reveals that the recent surge has pushed Chainlink into an overbought territory. This implies that a temporary pause or cool-down may be in order, especially considering the market’s current overheated state.
The $10.00 mark stands as the first line of defense for Chainlink. If this support level is breached, we could see a potential test of $9.00, which holds critical support. Continued bearishness may result in further decline, with the possibility of a major downward correction.
Nevertheless, if Chainlink manages to rebound from $10.00, there is a chance for price appreciation, potentially even reaching the $11 mark, thus negating the bearish thesis.
Aside from the technical price indicators, other factors in the market point towards an impending decline in Chainlink’s price. The Market Value to Realized Value (MVRV) ratio serves as an important metric in assessing the average profit or loss of investors who have acquired an asset.
Currently, the 30-day MVRV ratio for Chainlink sits at 25.22%. This indicates that investors who bought LINK in the past month are likely to sell their holdings and secure profits, possibly triggering a sell-off. Historical data reveals that when MVRV exceeds the 20% threshold, Chainlink has experienced significant corrections. Hence, this level is deemed a danger zone.
As these investors cash out their gains, those who experienced losses during the price surge – namely short traders – will also attempt to recover their investments. This will exert additional bearish pressure on Chainlink. When combined with the selling pressure triggered by profit-taking, a price decrease becomes increasingly probable.
While a substantial downturn is not expected at this time, it cannot be entirely ruled out. The recent rally alone resulted in approximately $12.3 million worth of short liquidations in only three days. Traders will strive to correct these losses, further contributing to the bearish sentiment surrounding Chainlink.
In conclusion, Chainlink’s impressive price surge of 35% over three days seems to be slowing down, potentially signaling an impending correction. The MVRV ratio, which is currently within the danger zone, suggests a decline may be on the horizon. It is essential for both investors and traders to closely monitor the situation and brace themselves for possible market fluctuations.
