Chainlink price has bounced back by over 24.70% from its lowest point this month. This rebound could be short-lived despite some positive developments in the network.
Summary
- Chainlink price has formed a bearish pennant pattern on the daily chart.
- It is also about to form a death cross pattern, a highly bearish pattern.
- The crash may happen despite the ongoing whale buying.
Chainlink (LINK) token rose to $18.72, up by 25% from its lowest point this month. This rebound has brought its market capitalization to over $13 billion.
Chainlink to be oracle for Circle’s Ark layer-2
LINK price rose by 3% on Tuesday after Circle launched the testnet of Arc, its stablecoin-focused layer-2 network. Chainlink will be one of the technology providers for the network, providing its developers with oracle solutions.
An oracle is a product that makes it possible for developers to connect off-chain data and bring it on-chain. A good example of this is the US government, which is now providing its official data to Chainlink, which developers can use.
Oracle solutions are mostly used by DeFi networks, which use them to provide price feeds. Arc will become one of over 60 chains that use Chainlink, including Polygon, Ethereum, Avalanche, and Solana. It has a total value secured of over $63 billion, giving it a market dominance of 61%.
Chainlink price has also benefited from the ongoing whale buying and exchange reserves plunge. Data shows that whales hold over 3 million tokens, up from 2.6 million at its lowest level in September. Whale buying is a sign that these investors anticipate the coin rising.
LINK reserves in exchanges have dropped to 256 million, much lower than last month’s high of 283 million. Falling reserve balances is a sign that investors are not selling, but are moving their tokens to self-custody.
Chainlink price technicals points to a crash
The daily timeframe chart shows that the LINK price has crashed from the year-to-date high of $27.83 in September to the current $18.74.
It is slowly forming a bearish pennant pattern, which is made up of vertical line and a symmetrical triangle. It resembles an upside-down flag.
The coin is also about to form a death cross pattern as the spread between the 50-day and 200-day Weighted Moving Averages narrow. It also remains below the Supertrend indicator, a sign that bears are in control.
Therefore, the Chainlink price will likely have a strong bearish breakout, potentially to this month’s low of $14.92. A crash below that level will point to more downside to $10.
