Chainlink (LINK) is showing increasing signs of downside risk as weakening whale demand and deteriorating on-chain metrics align with multiple bearish technical patterns. The token has remained under pressure for several months, and current market conditions suggest that further losses may be possible if key support levels fail.
Persistent Downtrend Since August
Chainlink has been in a sustained downtrend since August, reflecting broader weakness across the altcoin market. At the time of writing, LINK is trading around $12.38, down 4.5% in the last 24 hours and approximately 16.6% below its monthly high. On a broader timeframe, the token has lost nearly 54% from its 2024 peak, highlighting the extent of bearish sentiment.
Whale Buying Activity Loses Momentum
On-chain data signals a notable slowdown in whale accumulation. According to Nansen, whale-held LINK balances increased from 1.77 million to 1.91 million tokens during the first half of December, suggesting short-term accumulation. However, holdings have since declined to 1.87 million, indicating that large investors have begun reducing exposure.
A decline in whale demand is often viewed as a cautionary signal, as these participants typically act as early movers in major market shifts. Reduced whale interest can dampen retail confidence and amplify selling pressure during periods of technical weakness.
Network Activity and DeFi Metrics Deteriorate
Fundamental indicators also point to softening demand within the Chainlink ecosystem. Data from DeFiLlama shows that total value locked (TVL) across Chainlink-based DeFi protocols has fallen sharply from $1.13 billion in late August to around $530 million.
Additionally, weekly protocol fees have declined by nearly 50% since September, signaling reduced network usage and lower economic activity. Together, these trends suggest a slowdown in ecosystem engagement, potentially limiting near-term upside for LINK.
Bearish Technical Structure Takes Shape
From a technical perspective, LINK is forming a descending triangle pattern on the daily chart—a structure commonly associated with bearish continuation. The pattern consists of a falling upper trendline and a flat support zone, with confirmation occurring if price breaks below horizontal support.
Currently, LINK is trading just 5% above this key support, leaving little margin for error. Historically, breakdowns from similar structures have resulted in accelerated selling pressure.
Momentum indicators reinforce the bearish outlook:
MACD remains below the zero line, signaling negative momentum.
RSI is trending downward near 42, suggesting sellers retain control while still leaving room for further downside before oversold conditions emerge.
Adding to the risk, LINK is also approaching a potential breakdown from a multi-year double-top formation, a pattern that often precedes deeper corrections when confirmed.
Key Levels to Watch
If Chainlink fails to hold the $10.1 support level, which has acted as a strong floor since mid-2024, the price could slide toward its August 2024 low near $8. Such a move would mark a significant extension of the current downtrend.
📜Outlook
With declining whale participation, weakening on-chain fundamentals, and a fragile technical structure, Chainlink faces elevated downside risk in the short term. Bulls will need to defend key support zones convincingly to avoid a deeper correction, while traders should closely monitor volume, whale flows, and confirmation of the descending triangle breakdown.
