LINK, the native cryptocurrency of the decentralized oracle network Chainlink, dropped by 2.77% on Thursday during US trading hours to reach $11.92. This decline came after a broad market correction, where Bitcoin's reversal from $89,000 led to another series of liquidations in the cryptocurrency market. Despite the sell-off, Chainlink's reserves continue to support the sustainability of the network by accumulating more LINK tokens from the market. Has their belief in the vision of individual investors for this asset been affected?
#### Key points:
- Chainlink's price shows a bearish collapse from a 31-month support line, indicating potential risks of a significant decline in the future.
- On-chain data showed that Chainlink added 92,946.23 LINK tokens to its reserve on December 18.
- The open trading volume associated with LINK futures contracts has dropped to $507 million, reflecting a decrease in speculative strength among market participants.
#### Open trading volume for Chainlink futures contracts decreased by 23% as traders reduced their exposure.
On December 18, the cryptocurrency market experienced a sudden surge in selling pressure, causing Bitcoin to drop to around $85,000. This came after the release of the Consumer Price Index (CPI) data from the Bureau of Labor Statistics at 2.7%, a figure below expectations, but it triggered a "sell the news" sentiment in the cryptocurrency market despite its potentially positive impact on the Federal Reserve's decision regarding interest rates.
At the same time, LINK futures contracts have seen a continuous decline in open trading volume, dropping from $658 million to $507 million over the past two weeks, a decrease of about 23% according to Coinglass data. This indicates reduced participation from traders or changes in their positions.
In a related development, Chainlink added 92,946.23 LINK tokens to its reserve that day, bringing the total to 1,232,139.92 LINK. These additions are based on revenues from external blockchains and fees collected directly on-chain through automated exchanges.
Chainlink's reserve utilizes a Payment Abstraction system, which includes a cross-chain interoperability protocol (CCIP), automated task processing, and real-time pricing data. This allows for the conversion of diverse payments to LINK on Ethereum, with days of delay for protection, and no plans for long-term withdrawals.
With an average purchase price of $17.78 per LINK, the holdings are below the current value, creating an unrealized deficit.
#### Chainlink's price shows a bearish collapse below a 31-month support line
Over the past 10 days, the price of Chainlink dropped from $15 to $11.85, recording a loss of 21%. On the daily chart, this correction led to a sharp collapse from the long-term support line that had been a major accumulation area for buyers.
Since June 2023, the price of Chainlink has seen multiple reversals from this lower line, with triple-digit gains at each rise. Thus, the recent collapse indicates a significant loss for buyers and risks of a prolonged correction soon.
The declines in key exponential moving averages (20, 50, 100, 200) reinforce negative sentiment. If the collapse continues, the correction may extend an additional 16% to retest the psychological level at $10.
Conversely, if the price regains the lower support line, buyers may strengthen their control over the asset.
@Binance Square Official $LINK
