Chainlink (LINK) price may fall as investor optimism gradually fades.
The emerging bearish sentiment could lead to a drawdown as network activity has been minimal compared to its valuation.
Problems with Chainlink
Chainlink price, which is trying to break and close above a key resistance level, has a lot to do with investors. Since late July, LINK holders have shown intense optimism despite the crash. This has kept the altcoin from significant losses and also led to a rally in the altcoin’s price in mid-August. However, this intense optimism is now starting to fade.
Despite the recent price rally, the weighted sentiment for LINK has been steadily falling. It currently remains above the zero line, indicating that there is still some positive sentiment among holders. However, this optimism is slowly fading.
Read more: How to Buy Chainlink (LINK) and Everything You Need to Know
One of the key indicators of this change in sentiment is the NVT (network value to transactions) ratio. This ratio is currently at a four-year and eight-month high, last seen at these levels in January 2020. The NVT ratio is a metric used to evaluate the value of an asset relative to its transaction activity.
An elevated NVT ratio suggests that LINK is significantly overvalued relative to its actual network activity. This could mean that the price has gotten too far ahead of the underlying fundamentals.
As optimism fades and the NVT ratio remains high, LINK investors may need to brace for a potential price correction.
LINK Price Forecast: Key Barrier Ahead
Chainlink price at $12.00 is looking to flip the $12.35 resistance into a support level. This level has been tested multiple times as a bounce point, making recovery above it critical for LINK.
However, mixed signals from the network and LINK holders point to a different path. Chainlink price could see a dip to $10.79, a local support level. While a drop below that level is unlikely, adverse conditions could send the altcoin to $10.00. This would erase the 22% recovery seen in mid-August.
Read More: Chainlink (LINK) Price Prediction 2024/2025/2030
However, if the altcoin manages to sustain its gains and bounce off the $10.79 support, it could break $12.35. This would push Chainlink above $13.00, which would invalidate the bearish thesis.
