Chainlink (LINK), which was rising parabolically on the daily chart, has lost its shape despite whales’ wallets with at least 100K, wallets hitting new all-time highs. Even the weekly charts have a bearish story.
Chainlink crashes below the 50-day MA due to market sell-off
Chainlink (LINK) crashed below a major support level, the 50-day moving average, a short-term indicator. During this crash, the token lost two psychological support levels, the $10 level and the $9.5 support levels. The above chart shows that as long as LINK prices were above the 50-day MA, the bulls were there to push the prices higher. However, at times when it lost this support level, it has fallen to deeper support levels at $8.60.
This suggests that the 50-day moving average acted as a dynamic support level for LINK over time. As long as the price stayed above the 50-day moving average, it meant that the bulls were in full control and buying pressure continued. In such cases, the retracements back to the moving average would be seen as an opportunity for buying, thus allowing prices to rally and continue rising.
However, when LINK lost the 50-day moving average and moved below it, market sentiment began to weaken. A break below this level often signals that buying pressure is fading and sellers are starting to gain control.
Therefore, investors might become more conservative or begin taking their profits, putting additional selling pressure on the stock. This could cause the stock price to fall even more towards areas of support, such as $8.60, where past buying interest was sufficient to stall further drops in price.
Whale accumulation fails to stop LINK from bleeding
Such a crash follows the record-breaking rise in whale wallets, with a minimum of 100,000 LINK and a maximum of 800, the highest ever recorded. The appearance of whale wallets with a minimum of 100,000 LINK, reaching an all-time high of 800, usually indicates that the big players are increasing their position in Chainlink through accumulation. Many people usually consider whales to be institutions or big funds.
This can indicate rising levels of optimism about the future success of LINK. The more whales gather to have huge amounts of the tokens, the lower the number of the supply of LINK in the market becomes. This can be because whales do not sell their accumulated tokens. In such an environment, increased demand may lead to higher prices.
LINK veers off parabolic trail
Meanwhile, LINK has broken from following the trail of the parabolic rise. During its exponential growth just a few weeks ago, the token rose from $8.6 to above $10 in quick succession. But once it hit the $10.70 resistance level, there was a mass sell-off, and the traders started to take profits.
With more traders joining the bandwagon, buyers had no say at this level. As such, LINK prices once again crashed below to the $9.40 support level. However, based on historic data, this level does not serve as a permanent support level where prices can be sustained for a long time. It’s more or less a stopover.
When LINK reached this support level during February, it was just a stopover that smoothed the downfall for a bit. However, it was not able to be sustained. As such, there is a high chance the prices could once again fall to $8.60. Sometimes when the daily chart shows bearish signals, the weekly chart would show something totally different.
LINK’s path is bearish in the broader context
The daily chart has a lot of noise and jagged movements, which could be confusing. As such, whatever happens on the daily should be confirmed with a weekly chart. However, when we consider the weekly chart, LINK is still bearish because it has broken the uptrend line.
If prices move below an uptrend line, it usually signals that the force behind the rising prices is fading away, and buyers are losing their strength over the market. The uptrend line is basically a connection of higher lows in an uptrend market, which implies that as long as prices are moving above it, buyers remain in control of the market.
When the price falls below that line, it indicates that the force of buyers supporting the price movement is weakening, and the sellers are starting to show strength. Investors use this as an indicator that the existing upward price trend might be decelerating, consolidating, or reversing its direction.