In the month of November, a substantial increase in value was observed across various alternative cryptocurrencies, including Chainlink (LINK), which is currently trading at $18.63. With a rise of approximately 5% in the last 24 hours alone, LINK has recorded a monthly gain exceeding 52%.
These notable gains triggered profit-taking actions, as indicated by the escalating exchange supply ratio. Data from CryptoQuant unveils a gradual uptrend in this particular metric, reaching a peak of 0.161 for the month.
An upsurge in the exchange supply ratio typically signifies a rise in the movement of LINK tokens to exchanges, reflecting an intensification of selling pressure. This could potentially portray a bearish sign if there is no corresponding surge in buying activity to absorb the sold coins.
It is important to note that the surge in the exchange supply ratio coincided with a spike in wallet profitability. Based on information from IntoTheBlock, 64% of LINK holders are currently in a profitable position, a significant increase from the initial 36% at the start of November. Conversely, the percentage of wallets in loss dropped from 59% to 29%.
The increase in wallet profitability can contribute positively to market sentiment and potentially influence the price in an upward direction. However, to sustain its upward momentum, LINK requires a substantial increase in buying activity.
Analysis of Chainlink’s Price Trends – Is there Significant Buyer Activity?
An examination of Chainlink’s four-hour chart indicates that buying pressure has outweighed selling pressure. This is evident from the positive value of 0.02 for the Chaikin Money Flow (CMF) indicator, which is also indicating an upward trend, suggesting an influx of new buyers into the market.
Furthermore, a buy signal was generated by the Moving Average Convergence Divergence (MACD) line after crossing above the Signal line. If the MACD line continues to track above the Signal line, it could reinforce the bullish trend of the altcoin.
If buyers successfully manage to propel LINK above the resistance level at $19, the token may target $20.75. Yet, Chainlink has encountered rejection at this level multiple times, necessitating increased buying volumes to support a breakout.
Currently, the number of active addresses at present suggests a low volume of buying activity. According to IntoTheBlock, these active addresses plummeted by close to 50% within a week, declining from 7,420 to 4,210. Moreover, new addresses also decreased from 2,650 to 1,530.
Increasing Open Interest Indicates a Strong Market Momentum
On the derivatives market front, a surge in activity has been witnessed for Chainlink. Open Interest (OI) has spiked to its highest level in over seven months, standing at $396M at the moment, showcasing that derivative traders are initiating new positions on the altcoin.
Additionally, Chainlink’s funding rates have surged, indicating that the majority of the newly established positions were by long traders who are anticipating further gains.