Chainlink is a decentralized network linking smart contracts to real-world data. Its price now could be under downward pressure, and key resistance levels point towards further drops.
The Chainlink (LINK) price may be on a downward trend due to bearish signs that are starting to develop. A head and shoulders pattern has developed, suggesting the possibility of further downtrends. Traders watching for lower prices to make the most of a future bull run may find this slump a great opportunity. However, how low can the price go before it stabilizes? Let’s get the whole concept of Linkchain.
Understanding the Bearish Head and Shoulders Pattern
Chainlink price action has been taking the form of a head and shoulders pattern, classically recognized as a bearish signal. The formation is an indication that may be reaching the end of an up-cycle, setting the stage for a potential trend reversal.
- First Shoulder: The first shoulder formed in early December.
- Head: The middle-week high price was the high of this cycle, meaning a high.
- The left shoulder: the potential second shoulder in this sequence, began its formation early this week as a possible indication of more downside pressure.
Price Action Analysis
LINK price action opened strong early in the week and reversed mid-week. At the time of writing, it’s traded 15.21% lower since the week’s high; currently $21.97. It has followed bearish expectations of the head and shoulders pattern.
Chainlink Price Targets: How Low Can LINK Go?
Even though the long-term outlook for Chainlink in 2025 remains positive, short-term pullbacks can provide buying opportunities at cheaper prices. The support levels that LINK might find its way to before rallying again are being closely watched by traders.
Key Support Zones to Watch:
- $18.60 – $19.80: This is the next potential support range where LINK might find its bottom before bouncing back.
- $14: Some analysts believe that LINK could drop to a low of $14 based on the strength of the bearish trend.
On-Chain Data and Market Sentiment
The on-chain data gives a more detailed view of the current market sentiment and the possibility of further downside:
1. Spot Flows: LINK has witnessed net outflows greater than net inflows for the past four weeks. This creates a net negative sentiment majorly because of profit-takings from the immense bullish run since November.
2. Exchange Flows: As of the latest reports, about 1.02 million LINK tokens are leaving the exchanges, compared to only 713,820 coins being deposited in the exchanges. This creates net outflow and reduces liquidity, resulting in bearish pressure.
3. Funding Rates: The move from positive to negative funding rates in December further propels the expectation of downside pressure. Negative funding rates expose a stronger preference for short positions, meaning traders are increasingly betting on a price decline.
What’s Next for Chainlink?
Though current market sentiment is bullish, chances for a turnaround remain at bay in case strong demand emerges. Head and shoulder pattern coupled with profit booking and falling market enthusiasm have provided an impressive case to expect further downtrend, however, the chances of turning around in the positive sense remain viable in case the demand re-emerges and breaks the bearish trend.
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Conclusion: Chainlink’s price is under greater bearish pressure due to the head and shoulders pattern and the negative on-chain data. The next major resistance point is important, with the potential support areas around $18.60 to $19.80. Traders should be cautious of the downside, but this also presents a buying opportunity when prices reach lower levels and a new bull cycle may emerge.
Stay tuned for further developments as market sentiment shifts and technical patterns unfold.
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