The entire cryptocurrency market is currently experiencing a downturn possibly due to the anticipation surrounding the initial U.S. FOMC meeting of the year, a decline in U.S. stock futures, and DeepSeek panic selling.
Chainlink [LINK] followed suit by recently breaching the $24 support level within a 4-hour timeframe after exhibiting a bearish change of personality (CHoCH), signaling a shift in market sentiment.
This breach was succeeded by a test of the $22 level, which acts as a crucial support threshold to uphold the price above $20.
LINK displayed multiple instances of structural breaks (BOS) and balance points, with the most recent BOS leading to a descent towards $22.
If the bulls do not step in promptly, Chainlink is at risk of further downward movement beneath the crucial $22 support, potentially exploring lower support levels below $20.
A continuous move under $20 could trigger a more pronounced sell-off towards the $18 level — historical support areas.
Alternatively, a resurgence in buying pressure could see LINK recover beyond the $22 mark and strive to surpass previous resistances above $24 once more.
Ultimately, the determining factor for LINK’s short-term direction will be its capacity to hold above these vital support regions.
A failure to do so might intensify the bearish momentum, while a revival of bullish activity could stabilize the decline and pave the way for a rebound towards higher resistance levels.
The market’s reaction in the forthcoming sessions will play a pivotal role in defining Chainlink’s forward trajectory.
LINK’s influx of transactions and sentiment
Despite witnessing a remarkable 103% surge in transaction volume within the last 24 hours, the overall weekly count has decreased by 53%.
This decline in transactional activity could imply a diminishing interest or a consolidation phase post a significant surge. Historically, such a decrease in inflows has frequently preceded further price drops.
If this pattern persists, LINK may encounter sustained downward pressure in the short run.
The future implications depend on whether transaction volumes can stabilize or resume an upward trend, potentially impacting a price recovery.
Given this scenario, Market Prophit’s sentiment indicators for LINK indicated a disparity between the general sentiment of the crowd, which stands moderately bullish at 1.65, and the more bearish outlook of market professionals or ‘smart money’ at -0.76.
When the sentiment of smart money is negative, it often foreshadows a decline or continued downward price trend, even if the overall crowd sentiment is positive.
This divergence suggested that while individual investors might be optimistic, the cautious stance by smart money could restrict the chances of a near-term rebound in LINK’s price.
Looking ahead, this could lead to sustained volatility or further declines if the professional sentiment remains pessimistic.