Chainlink’s price joined other cryptocurrencies in a strong reversal as US bond yields surged to their highest levels in about two years. LINK, the biggest oracle network in crypto, fell to $21.21 on Wednesday morning, down over 31% from its highest point in December. So, is this the end of the Chainlink token rally?
Chainlink price analysis
The daily chart shows that the LINK price topped at $30.9 in December and has now suffered a harsh reversal to trade at $21.13. During this crash, the token moved below the key support level at $22.87, its highest in March last year. It was also the upper side of the cup and handle pattern.
Chainlink’s price has also gradually dropped below the 50-day moving average and the bottom of the trading range of the Murrey Math Lines tool. Moving back to that average price is a sign that the coin has formed a mean reversion, where an asset falls back to the moving average.
A closer look shows that the token has formed a head and shoulders pattern, a popular bearish sign whose neckline is at $19.87. A H&S pattern comprises a head, which is at $31, two shoulders, and a neckline.
Therefore, from a technical standpoint, the token will likely continue falling in the next few days. More downside will be confirmed if it drops below the neckline at $19.8. A crash below that level will be a sign that bears have prevailed and will lead to more downside, potentially to the weak, stop & reverse point at $15.65.
On the positive side, there are signs that the coin has formed a cup and handle pattern, a popular bullish sign whose upper side is at $23. The current pullback may be part of the pattern’s handle section. If this happens, Chainlink’s price may bounce back and later peak at the extreme overshoot of the Murrey Math Lines at $43.75.
LINK has some solid fundamentals
Chainlink’s technicals are sending mixed signals about what to expect in the near term. However, the network has some of the best fundamentals in the crypto industry.
First, Chainlink recently introduced a new standard for crypto security that has attracted several projects. The recently launched Ripple USD (RLUSD) became the latest big token to join the network, a move that will provide it with quality off-chain data. More cryptocurrencies are expected to join this standard in the near term.
Second, Chainlink has continued to extend its market share in the oracle industry, with a total value secured (TVS) of over $37 billion. It secures top projects like AAVE, Compound, and Spark, and is much bigger than other networks like Pyth, WinkLink, and Band Protocol. Chainlink’s total perpetual DEX volume secured in the last 30 days stood at over $44 billion.
Further, there are signs that whales are still accumulating the LINK token. For example, Donald Trump’s World Liberty Financial (WLFI) recently bought LINK tokens worth over $2 million, a good thing since he is becoming the US president in two weeks.
Chainlink has a strong staking yield of 4.32%. This yield is calculated by dividing the LINK rewards with the total staked. A 4.3% yield is good since it is higher than other networks like Solana and Tron.
There are also rising odds that the Securities and Exchange Commission (SEC) will approve a spot LINK ETF later this year. Such a fund makes sense since Chainlink is one of the top players in the crypto industry with a market cap of $13 billion. This approval will likely lead to more gains as it would lead to more LINK purchases by institutional investors.
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