Chainlink (LINK) has seen significant volatility this week. Its price has fallen more than 13% from Monday’s high, bringing LINK to a critical support level around $11.20. Traders and investors are keeping a close eye on this important area.
The importance of this level is further underscored by on-chain data from Santiment, which shows that demand for LINK is cooling. This adds uncertainty around the asset’s short-term price action.
The next few days will be crucial as Chainlink oscillates around this important support. The outcome here could determine whether LINK stabilizes and regains its footing or faces further declines. This level will likely set the stage for LINK’s next major move, making it a critical point of interest for market participants.
Is Chainlink Demand Falling?
Uncertainty and fear are currently driving market sentiment for Chainlink (LINK), with its price testing a major support level amid declining demand.
On-chain data from Santiment points to market weakness. The negative divergence between price and daily active address (DAA) confirms the recent decline in demand for LINK. This metric compares the price action of an asset to changes in the number of daily active addresses, providing insight into whether on-chain activity is supporting price action.
Currently, the LINK DAA price discrepancy is -61.2%. This indicates a significant gap between its price and the number of active users on the network. Such a significant negative discrepancy indicates a weakening market and hints at the possibility of further price decline.
The lack of online activity to support the current price level is a concern. Traders and investors are concerned that LINK may have difficulty maintaining its position above the critical support of $11.20. If demand does not increase soon, LINK may face additional downward pressure, which may lead to a deeper correction in the coming days.
LINK Price action shows indecision
Chainlink is trading at $11.22 after losing its 4-hour 200 moving average (MA). This critical indicator is now acting as low-term resistance. This development has left LINK in a precarious position, with the immediate support level being the $10.91 low seen on Tuesday.
Holding above this level is necessary to preserve the possibility of continuation of the uptrend. If LINK maintains this support, the price may enter a period of sideways consolidation, setting the stage for a potential push to local highs next week.
However, LINK could face further downward pressure if it fails to hold support at $10.91. Key levels to watch include $9.50 and the local low at $8.12. A break below these levels could signal a deeper correction, which could lead to a bearish trend.
On the other hand, holding above $10.91 could be the basis for a recovery. This could allow LINK to retest higher resistance levels and possibly continue its uptrend. Traders and investors are closely watching these price levels to determine LINK’s next move.
