- Chainlink is expected to breach its three-year-high price of $52 once a spotted descending wedge pattern plays out.
- Analysts have also highlighted that three key factors, such as the dwindling reserves of LINK on exchanges, booming network activities, and short and long positions imbalance, could fuel price growth.
Chainlink (LINK) has, over the last seven days, recorded a 6% gain after joining the broad market rally to break a crucial resistance level. At press time, LINK was trading at $11.38.
Subjecting this asset to technical analysis, it was observed that LINK’s Bollinger Bands was tightening which signals a possible breakout above the $13 level. On top of that, its MACD confirms this bullish outlook as it approaches the positive zone. However, it would first have to breach the $12.82 resistance level before proceeding to a new height.
Looking beyond its market indicators, analysts outlined three significant occurrences that have established this bullish potential.
Selling Pressure Weakens
According to our research, exchange reserves for LINK have declined by 0.26% to 166.21 million LINK in the past 24 hours. Our analysts explain that only a few LINK tokens are available for sale on exchanges, creating room for an upcoming rally.
Booming Network Activities
The Chainlink network activities have been recently booming with the number of active addresses rising by 1.25% in the last 24 hours. This represents an increased participation with 178.91K addresses. Transaction count has also surged by 1.28% to reach 4.05K according to CryptoQuant.
According to analysts, this information is a testament to the increasing demand for LINK. Amid the backdrop of this, whale activities have also been increasing as blockchain data has highlighted a 293% surge in just 24 hours on September 25. According to our report on September 27, whales accumulated about 8.5 million LINK ($108.8 million) within just 24 hours. In the post, we highlighted that the cumulative holdings of these wallets had increased from 685.5 million LINK in the middle of August to 694 million in late September.
The Short and Long Imbalance
Data establishes that 53.35% of traders are currently short on the asset compared to 46.65% betting on long positions. According to analysts, this imbalance could force a short squeeze once the asset manages to breach the $13 level. This implies that short traders would be forced to buy back as soon as possible.
For crypto analyst Michael, LINK is an opportunity of a lifetime. As we earlier reported, Michael hinted that $9-11 is the perfect entry point before it surges to $35. According to him, LINK could likely breach its three-year-high of $52.88.
Chainlink is still consolidating above the crucial resistance and flipping that for support. I think anything between $9-11 is an interesting one to buy into. I mentioned it a few times, but it remains to be an opportunity of a lifetime.
Another analyst identified as ZAYK Charts has predicted that LINK could surge by 229% to hit $40. Based on this analysis, this prediction is based on a long-term descending wedge pattern which usually indicates a bullish momentum.
Citing the previous cycle, the analyst pointed out that the late 2019 to early 2021 saw the first descending wedge pattern formed by the asset. In 2021, LINK reached its all-time high price of $50 before taking a nosedive. According to him, the current pattern is nearing its apex.
