Chainlink (LINK) has experienced a notable price retreat over the past three days, attributed to declining demand for its exchange-traded funds (ETFs) and a hesitance among buyers. The token has now dropped to $13, representing a significant decline of more than 50% from its highest value in August of the previous year. This downturn has seen Chainlink’s market capitalization fall to approximately $9.3 billion.
The decrease in LINK’s value aligns with third-party data indicating that interest in the Grayscale Chainlink ETF has significantly diminished in recent days. The fund has recorded no inflows over the past two days, with its total net inflows now standing at over $63.32 million. In stark contrast to last month’s performance, where it achieved inflows of $59.1 million, it only managed to attract $4.1 million this month.
The current state of the Grayscale LINK ETF suggests that the recently approved Bitwise fund may not see robust market reception this year. Chainlink’s performance has lagged behind other notable altcoin ETFs, such as those for XRP and Solana, which have attracted inflows of over $1.2 billion and $816 million, respectively, since their debuts.
Despite these challenges, Chainlink’s underlying fundamentals remain strong. Data from CoinGlass reveals a decrease in the supply of LINK tokens available on exchanges, which has fallen to 122 million from a peak of 156 million in October. In contrast, Chainlink’s strategic reserve has seen growth, increasing to 1.5 million tokens, valued at over $19.8 million. Notably, a recent acquisition of 87,829 LINK tokens further illustrates this growth.
Beyond its financial performance, Chainlink has been making strides in the real-world asset tokenization sector, forging partnerships with major firms such as Swift, Euroclear, JPMorgan, and UBS.
From a technical analysis perspective, the daily chart reveals the formation of a bearish pennant pattern for Chainlink. This pattern, characterized by a vertical line and a symmetrical triangle, suggests potential further downside in the upcoming weeks. Currently, LINK is trading below both the 50-day and 100-day Exponential Moving Averages and continues to track beneath the Supertrend indicator. The Relative Strength Index has also seen a decline, dropping from 63 on January 6 to 52, indicating waning bullish momentum.
Given the current technical setup, there is a notable risk that Chainlink may face a bearish breakout, potentially testing the key support level at $11.60, marking a significant threshold last reached in November.
