Recent on-chain data indicates a significant decrease in the Chainlink (LINK) supply held on exchanges, reaching its lowest point in nearly four years. This trend could be a positive signal for LINK’s future market performance.
The “supply on exchanges” metric tracks the proportion of the total circulating Chainlink supply stored in centralized exchange wallets. A decrease in this metric suggests that a net amount of LINK is being withdrawn from exchanges, often interpreted as a sign of investor accumulation, which can be bullish for the asset’s long-term price.
Meanwhile, LINK’s price has been moving sideways since November 10 after reaching a high of nearly $17. Can this 66-day range indicate an accumulation before the next rise?
According to recent Santiment insights, the current Chainlink supply on exchanges has fallen to just 14.87%, the lowest since February 5, 2020.
This decrease coincides with a rebound in LINK’s price following a drop below the $13 level. Although it’s challenging to definitively link the supply drop to the price recovery, this reduction in exchange-held LINK is generally seen as a positive development.
But considering that the price has been trading in a sideways range, we could say that investors have been using this time to accumulate the token in anticipation of further upside movement.
From its June 11 low of $5, the price of LINK has recovered significantly and increased by 230%, measured to its high of $17. This came as a breakout above its long-lasting horizontal range from May 2022.
This breakout signaled the start of the next bull cycle for the price of LINK, with the first uptrend being a five-wave impulse. Judging from the wave structure, the $17 high was the end of its wave 3, with the following sideways action most counted as wave 4.
Another higher high is expected for the completion of wave 5, with the price target set at $20, where the next significant resistance is located. That would be another 34% increase from the current level and mark the completion of this larger five-wave impulse from June last year.
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