Chainlink (LINK) is at a crucial level after a sharp 22% retrace from recent local highs, sparking concern among investors and analysts. The recent downturn is compounded by unsettling on-chain data that suggests Chainlink’s network activity may weaken, adding to the uncertainty surrounding the asset. This decline in activity, coupled with broader market volatility, has heightened fears of further losses.
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If the current bearish sentiment persists, LINK will likely test the next significant demand level around the lower $9 mark. This level is critical for determining the asset’s short-term future. A break below could signal deeper declines, while a successful defense might provide a foundation for recovery.
Investors are closely watching these developments, as the coming days will be pivotal for Chainlink’s price direction and overall market sentiment.
Chainlink Driven By Low Network Activity
Chainlink (LINK) has recently faced significant selling pressure driven by more than just market speculation. A decline in network activity also plays a crucial role in the ongoing bearish trend.
According to key data from Santiment, the price-Daily Active Addresses (DAA) divergence currently stands at -56.35%. This negative divergence suggests a disconnect between Chainlink’s price and user engagement, signaling potential trouble.
The DAA metric is vital for understanding whether network activity supports price movements. Generally, when active addresses, which measure user participation on a blockchain, increase with the price, it indicates strong underlying demand. It can suggest that the cryptocurrency is poised for higher values. On the other hand, if network activity rises while the price declines, it often presents a buying opportunity, signaling that the market may soon reverse.
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However, the current decrease in DAA for Chainlink paints a less optimistic picture. This drop indicates that user engagement isn’t supporting recent price action, a typically bearish factor. An increase in network activity is essential for LINK to see any meaningful consolidation and potential recovery.
Without a corresponding rise in DAA, the cryptocurrency may struggle to break free from its current downtrend. Investors are closely monitoring this…
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