Chainlink’s Price Path: Short-Term Dip with Signals of a Trend Change – Should You Buy LINK?

• Chainlink’s value has dropped 10% in the past three days, falling from $13.76 to $12.44 after a brief rally to $15 on July 21.
• The Chaikin Money Flow remains positive, but the Relative Strength Index is below 50, signaling bearish momentum.

Chainlink (LINK) has witnessed a 10% decrease in its value over the past three days, falling from $13.76 to $12.44. This recent drop came after a short rally to $15 on July 21, and this has left investors apprehensive about the future of the currency. The current trend poses a question of the possibility of a bullish reversal. 

Since April, Chainlink has ranged between $12. 73 and $18. 68. Early July’s bearish sentiment led to a price decline to $11.07.Current trading had the price oscillating in the range of $12. 33. Over the next few days, $12. 30 can act as a crucial support level, which may result in a price change. 

Even with the recent pullback, the Chaikin Money Flow (CMF) stayed above the +0. 05 level, suggesting that buying pressure was still strong. This indicates that the general market sentiment is still relatively positive. However, the Relative Strength Index (RSI) was trading below 50, indicating a bearish momentum change

Evaluating Short-Term Outlook and Market Sentiment

The short-term trend of Chainlink is still bearish. In the last three days, the price of LINK has further fallen, with the Open Interest (OI) dropping from $152 million to $143. 7 million. The decrease in both price and OI indicates that traders are bearish on the asset. 

There seems to be some caution among the speculators, which can be seen by their unwillingness to take long positions. The spot Cumulative Volume Delta (CVD) has also been declining, which points to low buyer interest. Also, future traders are bearish, which indicates that the price of Chainlink may continue to drop in the short term. 

One of the key factors contributing to the bearish sentiment surrounding Chainlink is the sharp decline in its Realized Capitalization. This essential on-chain measure that shows the total amount of realized profits minus realized losses has declined from $75.51 million to $11.14 million.

An increasing Realized Capitalization may mean that investors are buying tokens at lower prices, which could mean that the prices will rise in the future. On the other hand, a decline in this metric suggests that token ownership has shifted from active traders to passive investors. This shift in ownership patterns may indicate that the cryptocurrency is in the process of being revalued. 

Exploring Historical Patterns in Realized Capitalization

The historical data indicates that Realized Capitalization tends to decrease before the beginning of a consolidation period or a sharp price decline. If this downward trend persists, LINK may come under further pressure and possibly experience further price declines in the short term. 

Data from Glassnode reveals a rise in the number of LINK tokens being sent to exchanges. This increase in exchange deposits generally indicates that market participants are preparing to sell their holdings. A higher volume of tokens on exchanges suggests that investors are looking to liquidate their positions, which could contribute to further downward pressure on the price.