Chainlink’s (LINK) price may face challenges as it attempts to achieve higher values, indicated by troubling on-chain metrics and technical indicators. This cautionary outlook follows the token’s recent readiness to approach the $12 mark.
Even though a price increase is still a possibility, this on-chain analysis suggests it might take longer than expected.
Emerging Concerns for Chainlink
On September 11, Chainlink’s Sharpe ratio was close to a higher level. Currently, however, this key metric, which assesses whether investment risks are justified by potential rewards, has fallen to 0.25.
A rising Sharpe ratio indicates a favorable return on investment. In contrast, a declining or negative ratio signifies that the asset’s volatility may not warrant the risk-adjusted returns.
This analysis implies that buying LINK at its current price in the short term carries significant risks to invested capital.
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Another indicator reflecting this sentiment is Chainlink’s network activity. As reported by IntoTheBlock, there has been a substantial decrease in active, zero-balance, and new addresses over the past week.
An increase in these metrics would typically denote strong user engagement, which is usually a bullish sign. Thus, the current decline suggests that fewer market participants are engaging with the network.
This drop in overall activity could adversely affect Chainlink’s price, particularly as it coincides with a decline in trading volume.
LINK Price Forecast: Critical Days Ahead
An examination of the daily chart reveals that LINK’s price last surpassed $12 on August 25. Two weeks later, it experienced a 22% drop, falling below $10. Although the altcoin has shown signs of recovery since then, BeInCrypto points out potential resistance at $10.74.
Additionally, the Chaikin Money Flow (CMF), an important indicator of market momentum, has struggled to move above the zero midpoint. The CMF is vital in assessing whether a cryptocurrency is entering an uptrend or downtrend. A rising CMF indicates an uptrend or the potential for one, while a falling CMF suggests the opposite.
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If the CMF continues its downward trend, it may suggest increased profit-taking following the recent price increases. Consequently, LINK’s price could fall to $9.47, with a severely bearish scenario potentially dropping the token to $8.08. Conversely, if the overall market transitions into a prolonged bullish phase, LINK could rise to $12.33.
Disclaimer
As per the Trust Project guidelines, this price analysis article serves only for informational purposes and should not be regarded as financial or investment advice. BeInCrypto strives for accurate and unbiased reporting, yet market conditions can change without notice. Always perform your own research and consult with a financial professional before making any investment decisions. Kindly note that our Terms and Conditions, Privacy Policy, and Disclaimers have been revised.
