Chainlink (LINK), the token powering the leading oracle network Chainlink, has seen a significant rise in demand over the past two weeks, mirroring a broader cryptocurrency market recovery. The price of LINK has jumped 10% in the past seven days, attracting the attention of large investors, also known as whales, who are accumulating the token in anticipation of future growth.
This bullish sentiment is driven by several factors, including a decrease in selling pressure and potential undervaluation. On-chain data from IntoTheBlock reveals a negative exchange netflow for LINK since July 4th. This means more LINK tokens are being withdrawn from exchanges than deposited, suggesting investors are holding onto their holdings rather than selling. Over $110 million worth of LINK has been withdrawn from exchanges in the past two weeks, further emphasizing this trend.
Whales are capitalizing on this perceived opportunity. A recent post by on-chain analyst Lookonchain revealed that an unidentified whale or institutional investor has been steadily accumulating LINK tokens since June 24th. Additionally, crypto analyst Ali Martinez found that whales holding between 100,000 and 1 million LINK tokens have collectively purchased over $120 million worth of the token in the past two weeks.
This accumulation might be fueled by the belief that LINK is currently undervalued. The asset’s Market Value to Realized Value (MVRV) ratio, which compares the current price to the average purchase price of all tokens in circulation, sits below zero for various timeframes. Historically, negative MVRV ratios have been seen as buying opportunities, suggesting the asset is trading below its intrinsic value.
However, a potential risk to this bullish outlook exists. While the price has risen, the Chaikin Money Flow (CMF) indicator remains negative and continues to decline. This indicator measures money flow into and out of an asset, and a bearish divergence occurs when the price rises while the CMF falls. This suggests the current price increase might lack sufficient buying pressure, potentially leading to a pullback.
Technical analysis based on TradingView indicates that if a pullback occurs, LINK’s price could fall below $14 to reach $13.84. Conversely, if the uptrend continues with stronger buying pressure, the price could climb to $15.56.
Overall, Chainlink is experiencing a period of increased demand and whale accumulation. While this suggests potential for further price growth, the negative CMF indicator warns of a possible pullback. Investors interested in LINK should carefully consider these factors and conduct their own research before making any investment decisions.