Chainlink shows recovery signs amid rising demand
Key Takeaways
- Chainlink (LINK) has seen an increase in exchange outflows, indicating a decrease in selling pressure.
- The Relative Strength Index (RSI) and Chaikin Money Flow (CMF) show an increase in buying pressure.
- Activity on the Chainlink blockchain has surged significantly over the past 30 days, signaling potential for further growth.
- Open interest in LINK derivatives is rising, indicating growing speculation on future price gains.
Decreasing Selling Pressure for Chainlink
In recent weeks, Chainlink (LINK) has experienced a reduction in selling activity. Data from CryptoQuant shows that net inflows to spot exchanges were predominantly negative, meaning more LINK was being withdrawn from exchanges than deposited. On November 4th, outflows hit a 30-day high, suggesting that many traders are unwilling to sell their LINK tokens.
This decline in selling pressure could pave the way for a recovery. At the time of writing, LINK saw an 11% increase within 24 hours and was trading at USD 11.85.
Increasing Buying Pressure
For a sustained recovery, it is crucial that buyers remain active. A look at the four-hour chart shows that buying pressure is increasing. The Relative Strength Index (RSI), which measures the strength of a trend, rose to 71, indicating strong buying momentum. The Chaikin Money Flow (CMF), which measures the capital flow into an asset, is also positive, reaching 0.17.
If this buying pressure continues, the next price target for LINK could be USD 13.13, based on the 1.618 Fibonacci level. The V-shaped recovery on the chart also suggests a healthy rebound from the downtrend.
Rising Activity on the Chainlink Blockchain
In addition to buying pressure, the increasing activity on the Chainlink blockchain could act as a catalyst for further growth. According to a post from Santiment, Chainlink has seen a surge in development activity of over 14,000% in the past 30 days. The number of active addresses on the blockchain also increased from 1,930 to 2,750 in just four days.
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An increase in active addresses typically indicates growing usage and interaction with the network, which is considered a bullish signal for the price.
Open Interest and Speculation on the Rise
In the derivatives market, growing interest in LINK is also evident. Open interest, which refers to the number of active contracts, rose to USD 203 million. At the same time, funding rates, which reflect the cost of holding positions in derivatives, reached the highest level of the month.
These developments suggest that traders are increasingly betting on rising prices and opening long positions. The declining selling pressure and rising interest in both the spot and derivatives markets could provide the necessary momentum for further price gains.
Our Assessment
Chainlink shows clear signs of recovery, supported by a combination of decreasing selling pressure, increasing buying interest, and rising activity on the blockchain. If these trends continue, LINK could see further gains in the coming weeks. The increasing number of active addresses and growing open interest in derivatives are particularly strong indicators of positive development. However, investors should closely monitor market conditions, as volatility in the crypto market can lead to rapid price changes at any time.
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