Chainlink Price Corrects 45% Since Yearly High – Wave Count Predicts More LINK Downside

Key Takeaways

• The LINK token supply is dominated by low activity whale addresses.
• LINK was rejected by a critical resistance area between $21-$25 with 38 million tokens.
• After a 45% decrease, is the LINK correction finally over, or will there be more downside?

The LINK price has fallen nearly 45% since reaching its yearly high of $22.86 on March 11. While the price bounced on April 13, it has failed to sustain any sort of an upward movement. Rather, LINK risks breaking down from a horizontal support area.

The correction has been substantial, and even if the LINK price breaks down, it is likely the downward movement will come to an end soon.

LINK Completes Five-Wave Increase

The LINK price completed a five-wave upward movement starting in June 2023. The increase culminated with a high of $22.86 on March 11. The price has fallen since, in what is likely another five-wave downward movement (white).

The defining characteristic of this drop is the symmetrical triangle in wave four, which is the most common patter for a wave four. A breakdown from the channel will confirm that wave five has started.

Due to their proximity, a breakdown from the triangle will also cause a breakdown from the $13 horizontal support area, which has existed since November 2023. A potential target for the bottom of wave five is between $11 – $11.80, created by a horizontal support area and the 0.618 Fibonacci retracement support level.

Despite this bearish LINK price prediction, a breakout from the triangle will invalidate the wave count. In that case, LINK can increase toward $15.40.

LINK Holders Not Selling Despite Profits: Road to $25 Poses Difficulty

The LINK price has increased by nearly 350% since trading at a low of $4.70 in June 2023. After a brief correction, it began another upward movement at the start of 2024, leading to a high of $22.86.

Despite LINK’s significant surge in value, long-term holders exhibit remarkable conviction by opting to hold on to their assets. Will LINK’s resilience be enough to propel it past $25, or are there lingering hurdles in its path?

Low Activity LINK Holders Dominate Network

The on-chain data for LINK shows that that 18 whales  hold nearly 50% of the entire LINK supply, and the majority of them are low activity addresses, meaning that they have less than 300 transactions in their lifetime. Judging by their past history, there are accounts that are likely to continue holding.

A similar conclusion is drawn by looking at the cohort of addresses that have held for longer than a year (blue), between one month and a year (green) and less than one month (orange). It is interesting to note that since December 2023 (red), there has been an increase in the number of holders and a proportional decrease in the number of cruisers (green).

This means that a portion of the LINK buyers from December 2022 (red circle) have not sold into the current rally, rather they have graduated into the holder category since they held their coins for more than a year.

This shows position conviction of LINK holders, since it shows that there has not been a significant amount of profit taking despite a more than three-fold increase since December 2022.

Can LINK Break Through the $25 Level?

The daily time frame technical analysis shows the Chainlink price has increased since the start of 2024. However, the upward movement has been contained inside an ascending wedge, considered a bearish pattern. Currently, LINK trades very close to the wedge’s resistance trend line.

Also, the wave count suggests the LINK price is in the fifth and final wave of its increase that started in June 2023. A potential target using the lengths of wave one and three is at $24.60, but the wave count suggests the price is nearing a top.

The RSI and MACD support this possibility since they have both generated a bearish divergence. This occurs when a momentum increase happens alongside a price decrease. It is indicative of weakening momentum and often leads to bearish reversals.

There is a large cohort of addresses that have bought between $21.20 and $26.73 and are at a loss. More specifically, there are 70,500 addresses that hold more than 38 million LINK tokens. This further aligns with the Fib resistance near $24.50, indicating that it will be difficult for the price to break it.

LINK Might Struggle to Break $25

The LINK price has recently broken out above $20, and holders are determined to not take profits despite significant increases. While this bodes well for the long-term price, there is a significant amount of on-chain and technical resistance near $25, making it difficult for the price to break it on its first attempt.