Chainlink (LINK), the decentralized oracle network, has been making waves in the cryptocurrency market with its recent price surge.
On May 24th, 2024, LINK hit a six-week high of around $17.50, marking a significant milestone for the altcoin. This rally has been fueled by a combination of favorable on-chain metrics, technical indicators, and market sentiment.
TLDR
- Chainlink (LINK) price hit a 6-week high of around $17.50 on May 24th, 2024, rallying over 30% in May.
- On-chain data shows increasing network activity and a favorable ratio of profitable to loss-making LINK transactions, indicating strong demand.
- Technical analysis suggests a bullish setup, with LINK breaking out of a bearish triangle and key resistance levels flipped to support.
- However, a bearish divergence in the Chaikin Money Flow (CMF) indicator raises concerns about the sustainability of the current rally.
- 62% of LINK holders are “in the money,” holding the token at a profit, while 32% are “out of the money,” holding at a loss.
One of the key drivers behind LINK’s price surge has been the increasing network activity observed on the Chainlink blockchain.
According to data from Santiment, the number of daily active addresses engaging with the Chainlink network has risen from 3,159 on May 14th to 11,304 on May 22nd.
Additionally, development activity on the network has also increased, with the number of unique GitHub repositories rising from 421 in mid-April to 436 currently.
These on-chain metrics indicate a growing demand for LINK, as more users and developers are actively participating in the Chainlink ecosystem.
Santiment’s data reveals that the ratio of LINK’s daily transaction volume in profit to loss has been highly favorable, reaching 11 on May 23rd.
🔗📈 #Chainlink has climbed well ahead of the #crypto pack, quickly surpassing $17.50 for the first time in 6 weeks. #Onchain today, there are 11 transactions in profit for every 1 $LINK transaction at a loss. This is the highest ratio since Dec. 8, 2022. https://t.co/nILlWsXWNh pic.twitter.com/joMV55V5x7
— Santiment (@santimentfeed) May 24, 2024
This means that for every LINK transaction that ended in a loss, 11 transactions resulted in a profit. As of the latest data, this ratio stands at 7.49, suggesting that profitable transactions continue to dominate.
The positive sentiment surrounding LINK is also reflected in the technical analysis of its price charts.
LINK’s recent price action has seen it break out of a bearish descending triangle pattern, with the price surpassing key resistance levels, including the $15 mark, which was reinforced by the 50-day, 200-day, and 100-day exponential moving averages (EMAs).
These moving averages now serve as potential support levels for LINK on the downside.
Moreover, the Relative Strength Index (RSI) has risen from 36 to 65 over the same period, indicating that buyers have taken control of the price action and reinforcing the strength of the uptrend.
The In/Out of the Money Around Price (IOMAP) model from IntoTheBlock also revealed that LINK faces relatively strong support on the downside compared to the resistance on the upside, implying that the path of least resistance for LINK is currently on the upside.
However, despite the encouraging signs, some caution is warranted. A key technical indicator, the Chaikin Money Flow (CMF), has been trending downward, forming a bearish divergence with LINK’s price.
The CMF measures the flow of money into and out of an asset, and a declining CMF during a price increase can indicate a lack of strong buying pressure, suggesting that the current rally may not be sustainable without more robust buying volume.
While a significant portion of LINK holders are “in the money,” holding the token at a profit, there is still a sizable 32% of holders who are “out of the money,” holding their tokens at a loss.
According to data from IntoTheBlock, around 432,000 wallet addresses, representing 62% of all LINK holders, are currently “in the money,” while approximately 221,000 addresses, or 32% of holders, are “out of the money.”
