Chainlink’s network activity has seen significant growth recently, indicating an increase in adoption and usage. Despite this surge in usage, LINK’s price faced a substantial double-digit drop in the past 24 hours.
Chainlink Facing Challenges
Recently, IntoTheBlock highlighted Chainlink’s increasing network activity in a tweet. They noted that Chainlink had an average of 8.22k daily active addresses, showing a remarkable 142% growth compared to a month ago.
In addition to the rise in daily active addresses, the number of transactions on the blockchain also increased, averaging 11.26k transactions over the last seven days.
Despite the uptick in LINK’s network activity, its price plummeted sharply by more than 12% in the past day, bringing its trading value down to $22.89.
The recent price correction led to 156k LINK addresses going “out of the money,” accounting for more than 22% of the total LINK addresses as per IntoTheBlock’s data.
A potential reason behind this was highlighted by crypto analyst Ali Martinez, who pointed out a sell signal triggered by LINK’s TD sequential.
Future Outlook for LINK
An analysis of Santiment’s data by CryptoCrypto revealed that investors acted on the sell signal by selling their holdings, as evidenced by the increased supply of LINK on exchanges and a decrease in its supply off exchanges.
Moreover, the heightened selling pressure was evident from the rise in Chainlink’s exchange inflow.
Simultaneously, prominent market players decided to sell, with whales depositing more than $25 million worth of LINK on centralized exchanges in recent days, signaling a lack of confidence in the token that could further drive down LINK’s price. A potential outcome could see LINK dropping back to the $20.66 support level.
However, the fear and greed index stood at 38% at the time of reporting, indicating that the market sentiment was leaning towards “fear.” This situation often hints at a possible trend reversal.
If the bulls take charge and initiate a recovery, crossing the $24.3 mark will be crucial for LINK to prevent significant liquidations. Increased liquidation typically leads to short-term pullbacks.