During the month of July, Chainlink (LINK) added more than 700K LINK tokens to its reserve, and LINK escaped from the bearish rising wedge pattern. But the token has to hold above the 50-day MA if a bull rally is to take over.
Chainlink reserve accumulates more than 5.2 million tokens
Chainlink reserves accumulated 706,809 LINK for $5.7M+ during July, bringing the total accumulation of LINK to 5.21 million, worth more than $43 million.
As Chainlink adds more LINK to its reserve, it purchases the tokens from the open market using revenue generated by its services, creating ongoing demand for LINK. These tokens are not burned but are held in the reserve, reducing the amount of LINK immediately available for trading while remaining part of the total supply. The reserve is designed to support the network over the long term by funding staking rewards, node operator incentives, ecosystem growth, and other protocol initiatives.
As adoption of Chainlink’s products such as Data Feeds, CCIP, and Automation increases, more service revenue can be converted into LINK purchases, strengthening the connection between network usage and token demand. While this strategy does not make LINK deflationary, it establishes a recurring buyback mechanism that can reinforce the token’s economic value as the ecosystem grows.
LINK narrowly escapes bearish pattern
The accumulation of tokens for its reserve has boosted its prices as LINK broke out of the bearish rising wedge. A rising wedge is actually a bearish formation that occurs when prices make higher highs and higher lows, but the upper and lower trend lines intersect each other at higher levels.
In this case, the price is in an uptrend, but the growth rate slows down because of the contracting range. In other words, each new wave upwards is weaker than the previous one, and bears manage to push prices lower from time to time.
Inside the pattern, buying pressure gradually fades as the market becomes overextended. Bulls are still in control, but they are no longer able to generate the same strength seen earlier in the trend. As the wedge tightens, volatility decreases and the balance between buyers and sellers becomes more fragile.
The pattern typically breaks to the downside because weakening demand is eventually overwhelmed by selling pressure. Once the price falls below the lower trendline, many traders interpret it as confirmation that the uptrend has ended, triggering stop-loss orders and fresh short positions. This often accelerates the decline, with the price commonly retracing a significant portion of the prior uptrend or falling by a distance roughly equal to the height of the wedge. While upward breakouts can occur, a rising wedge is generally considered a bearish reversal pattern, especially when it forms after a sustained uptrend.
Now that LINK has broken out of this bearish trend and is priced at $8.30, it is important that it does not crash below the 50-day MA, which is below at $8.027.
