LINK’s Support Collapses: Potential for Continued Downside?
As the cryptocurrency market faces a challenging phase, Chainlink (LINK) has not been spared, experiencing significant downturns that align with broader market trends. This past week, LINK’s value dropped by 38%, with a sharp 25% decline observed just in the last day.
The recent price action of Chainlink, coming against the backdrop of LINK’s recent surge above $21 in March, is influenced by technical patterns observed on its price chart.
Technical Outlook on Chainlink
A detailed analysis of the 3-day chart reveals that LINK has broken through a critical support level, indicating potential for further downside. In trading, a “support level” refers to a price point at which an asset typically does not fall below, as buying interest is strong enough to counteract selling pressure.
So far, since LINK broke through the support in the $13 to $11.40 range, the asset has faced further decline, suggesting a weakening in buyer enthusiasm.
Looking at the chart, there is a likelihood of LINK falling further until it reaches another major support level, which is currently found in the $5 region. Should LINK reach this support and break through it again, we could see more significant selling pressure.
Conversely, if the price stabilizes or bounces back at this point, it could indicate a potential recovery and restoration of investor confidence in LINK.
Market Reactions and Opportunities
The market’s reaction to these movements has been mixed. Data from Coinglass highlights that in the last 24 hours, the broader crypto market saw over 290,799 traders liquidated, with total liquidations amounting to $1.11 billion.
Within these figures, LINK-specific liquidations contributed over $6 million, dominated by long position liquidations of $5.11 million, compared to $384.43k from short positions.
Interestingly, despite the downturn, some large-scale investors, or ‘whales,’ appear to be viewing the lower prices as buying opportunities. Whales often take advantage of significant price dips to accumulate more assets at a lower cost, betting on future price recoveries.
Their actions can sometimes indicate a floor in price declines and a potential signal of upcoming market stabilization or recovery.
The recent performance of Chainlink (LINK) reflects the broader challenges facing the cryptocurrency market. Breaking critical support levels and experiencing sharp declines, LINK is navigating a volatile phase.
The market’s response, including significant liquidations, highlights the prevailing uncertainty. However, the interest shown by large-scale investors in accumulating LINK at lower prices suggests a potential silver lining.
Should the asset stabilize around the $5 support level, it could pave the way for a recovery. As always, investors should remain cautious, considering both technical analyses and market sentiment in their decision-making processes.
