Chainlink’s price trajectory has shown a worrying decline since late August, moving close to the confirmation of a bearish double top pattern. As a result, the cryptocurrency has faced significant selling pressure, compounded by recent whale activity.
Currently trading at approximately $12.49, Chainlink (LINK) has seen a sharp drop of 16% over the past month. The cryptocurrency’s market capitalization stands at approximately $8.84 billion, but this figure is nearly 55% lower than its peak earlier in the year. This downturn can be attributed to broader economic concerns, specifically related to U.S. tariffs on major economies and the Federal Reserve’s interest rate policies, fostering a risk-averse sentiment among investors in the crypto space.
Moreover, recent data reveals a concerning decline in the total value locked (TVL) in Chainlink-based decentralized finance (DeFi) applications, plummeting from over $1.13 billion in late August to around $545 million now. This reduction in TVL reflects a significant decrease in usage and demand for Chainlink’s services, leading to a downturn in investor interest.
In addition to the decrease in on-chain activity, the behavior of large investors, or “whales,” appears to be contributing to Chainlink’s difficulties. Data indicates that the balances of LINK held by whales have dropped by 2% over the last week to approximately 1.84 million tokens. Conversely, the amount of LINK held on exchanges has risen by 2.7% to about 226.73 million tokens, which might further intensify selling pressure and exacerbate price decline.
Technical analysis of the weekly chart also indicates ongoing challenges for Chainlink. The emergence of what appears to be a multi-year double top pattern raises alarms about a major price drop ahead. The peaks of this pattern have developed around $28.06, while the neckline sits at $11.08. Should the price fall below this critical neckline, further significant declines could ensue, potentially reaching as low as $8 or even $5, both prices that served as robust support levels during the previous year.
Momentum indicators are also reflecting bearish trends, with the MACD line crossing below the signal line, indicating that sellers maintain control of the market. Additionally, the Relative Strength Index (RSI) has decreased from overbought conditions to approximately 37.7, suggesting there may be room for further downside before any substantial reversal occurs.
For Chainlink investors and market participants, the focus remains squarely on the $11.08 neckline. Breaking through this level could mark a significant turning point for LINK, ushering in heightened volatility and potential losses.
