The price of Chainlink (LINK) recently dropped below the $18 support level, raising traders' concerns about a further decline to $12-$14. However, there are signals pointing to a possible rebound.
Chainlink’s Price Struggles Below Key Support
The price of LINK continues to decline, trading around $17.76, after opening at $19.12. Market analysts note that the asset has lost a key support zone between $18 and $19, increasing the chances for further downside. Analyst Nebraskangooner also pointed out that the price remains below the 200-day moving average, indicating that bearish sentiment is still dominant in the market.
MVRV Ratio Indicates Potential Price Rebound
Analysis indicates that LINK might be approaching its potential recovery zone. The MVRV (Market Value to Realized Value) ratio stands at -16.3%, which has historically coincided with periods of strong price recoveries. Analyst Ali noted that when MVRV dipped below -16% previously, LINK exhibited growth of 312%, 64%, and 52%, indicating potential for a similar scenario if the present trend continues.
Liquidation Data Reflects High Volatility
Data from Coinglass suggests peaks of market instability on the LINK liquidation chart. The largest liquidations occurred in December and late January, highlighting high volatility and forced position closures by traders. The recent declining liquidation levels haven't affected the use of high-risk leveraged positions, leaving the market vulnerable to sharp price swings. Such events signal potential significant price movements in the near future.
Despite current issues with Chainlink's price, factors such as MVRV and RSI indicating oversold conditions could lead to a rebound. Attention to support levels and macroeconomic conditions will be crucial for further analysis and forecasting.
