Chainlink’s price looks weak, but there’s more to the story – 2 reasons why

Chainlink [LINK] has shown a mild recovery after four consecutive days of decline. According to CoinMarketCap, as of the 30th of March, the asset gained over 3.47% in the past 24 hours and was trading at $8.76.

The improving on-chain data, along with derivatives data, is currently reinforcing optimism around LINK and suggests that the asset’s ongoing upside move could continue in the coming days.

On-chain and derivatives data signal a shift in sentiment

The data from the analytics tool CryptoQuant shows that investor interest in the asset has improved notably despite the recent decline.

According to Chainlink’s exchange reserve across all exchanges, a massive drop of 331K LINK has been recorded over the past 48 hours.

A declining exchange reserve typically suggests accumulation. When this occurs at a price level that has historically shown signs of reversal, it indicates that investors are not only expecting a potential rebound but may also be taking advantage of the dip.

On the derivatives side, it appears that intraday traders are following the market trend.

Data from CoinGlass’s LINK exchange liquidation map shows that, amid this recovery, traders are showing interest around $8.60 on the lower end and $8.83 on the upper end.

These are not just key levels; traders at these zones are highly overleveraged, having built $938.54K worth of long positions and $268K worth of short positions. This indicates a shift in market sentiment amid the ongoing recovery.

Meanwhile, LINK’s Long/Short Ratio has reached 1.06, its highest level in a month. A ratio above 1 reflects bullish sentiment among traders, as a larger number of participants are betting on the price to move upward.

In fact, LINK’s ongoing optimism is further supported by U.S. Spot LINK ETFs. Data from SoSoValue shows that these ETFs continue to record steady inflows despite ongoing market uncertainty.

This not only strengthens LINK’s outlook but also indicates steady and growing demand for the asset in the traditional market.

LINK eyes a potential 14.50% jump

On the daily chart, LINK appeared poised for a significant price uptick. The price action showed that LINK has been moving within an ascending channel pattern between its upper and lower boundaries since the 6th of February.

Since then, whenever the price has touched the lower boundary, it has recorded a strong rebound, something that LINK appears to be doing again.

Based on this historical pattern, if LINK remains above the lower boundary at the $8.19 level, it has strong potential to register a price increase of over 14.50% and could reach the $10.08 level in the coming days.

However, the Average Directional Index (ADX), an indicator that measures trend strength, has dropped to 14.43, well below the key threshold of 25, indicating weak trend momentum and a lack of strong directional bias in the market.

Final Summary

• Chainlink has jumped 3.47%, increasing the chances of a price rebound as it is currently trading near the lower boundary of an ascending channel pattern.
• Improving on-chain data, along with derivatives data, suggests that LINK could continue its upward momentum in the coming days.