LINK suffers strong downside despite signs of accumulation

2022/05/26 12:00:00

Uncertain market conditions are bound to yield unusual price action and such is the case with LINK, Chainlink’s native cryptocurrency. It experienced significant downside in the last 7 days despite showing signs of strong accumulation at its current range.

Chainlink is among the crypto projects with strong fundamentals but those aspects have not done much to support its price action lately. Like most top cryptocurrencies, LINK has been severely bearish in the last few months. It traded at $6.53 at press time, after dropping by 8.80% in the last 24 hours, and extending its weekly downside to 4%.

LINK’S volatile price action has been stuck in a narrow range for the last two weeks. However, this performance seems highly correlated with the rest of the crypto market. The price action also seems to align with the RSI which is currently hovering just above the oversold zone.

The unusual thing about its performance this week is that the Money Flow indicator suggests that LINK has experienced significant accumulation in the last few days. The only explanation is that strong retail accumulation has been taking place, but some whales have also been offloading their LINK holdings.

Evaluating the likelihood of downside induced by lack of confidence

The lack of upside despite accumulation might rub LINK holders the wrong way and trigger a selloff. The latest rally suggests the lack of healthy volumes to push up the price. The risk of more downside is further exasperated by the prevailing market conditions with investors leaning on the cautious side. This might explain the low buying volumes likely from the retail segment.

LINK might fall to the $5 range and potentially lower in case of another significant selloff. However, there is still a significant chance of a rally if the overall crypto market conditions improve.

Is LINK a good cryptocurrency to add to your portfolio?

Most cryptocurrencies are trading at heavily discounted prices after the recent market crash and the bearish market conditions that have prevailed in the last few months. Many investors are re-evaluating their crypto portfolios in favor of cryptocurrencies that have strong fundamentals. LINK seems like a good candidate considering that it backs a blockchain network operating in a relatively niche segment.

Chainlink provides oracle services for smart contracts and this happens to be one of the most essential functions in the blockchain industry. Its segment is poised to leverage robust growth in the next few years and that will likely have a positive impact on LINK demand, considering its role in the grand scheme of things.

While strong demand for cryptocurrencies is set to provide more value for LINK, it looks like the crypto and blockchain industry still has a lot of growing up to do. It looks like LINK is at the mercy of crypto headwinds for now.

The glass-half-full in this situation is that LINK is currently trading at a huge discount compared to its $52.98 all-time-high. The current price point represents a healthy entry point for anyone looking for a long-term crypto opportunity with strong fundamentals. However, note that there is still more downside risk, in which case, dollar-cost averaging would be useful.

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Patrick Smith United States

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