- Chainlink has had very positive social sentiment scores over the past few weeks.
- It was unclear whether LINK bulls would be able to sustain this rally.
Chainlink (LINK) recorded a 24% gain over the past week. A Santiment post on
📊 #Cryptocurrency Despite a -20.3% decrease in trading volume compared to the previous week, the market capitalization rose slightly by +0.5% over the past week. Highlight assets included $FLR, $RON, $LINK, $TAOand $RNDR. #Bitcoin Interest continues to wane as the snow turns to pumping. #altcoin. pic.twitter.com/jMvJSTdV7c
— Santiment (@santimentfeed) February 5, 2024
According to a recent AMBCrypto report, stablecoin inflows indicate increased purchasing power in the cryptocurrency market.
This ultimately pointed to the potential for altcoins to grow rapidly due to increased buyer dominance.
LINK’s Rally Survey
Since November 17, LINK has traded in an extended range from $12.85 to $16.6.
On February 1, LINK bulls closed the daily trading session above $16.6, breaking the range formation.
Santiment’s data analysis showed high positive engagement with LINK across social media platforms. This was also accompanied by a sharp increase in open interest on the futures market.
This suggested enthusiastic optimism, but there were some caveats.
As a Santiment post by Therefore, there was no profit in the altcoin market as a whole.
With Bitcoin (BTC) facing extreme resistance in the $43,000-$44,000 region, there was a chance that the market as a whole could hit a near-term high before the price declines further.
The Santiment chart above shows a decline in both development activity and average currency age.
The decline in development activity was one of the biggest declines seen in the past six months and may cause concern for investors.
Despite the price breaking above the $16.6 resistance level, the falling average coin age meant holders were eager to take profits.
The rise to $18.88 with the rise in OI may be driven by speculation rather than spot market demand.
Assessing short-term retracement potential
AMBCrypto analyzed Coinalyze’s spot CVD data to understand the behavior of traders in the spot market. After a sharp rise on February 1, spot CVD has been trending downward.
Meanwhile, prices continued to rise along with OI (as seen in the previous Santiment chart).
Read Chainlink’s (link) 2024-25 price prediction
Funding rates remained positive, signaling near-term optimism. Considering various factors, the LINK rally appears to be overextended.
A retest of the previous range high of $16.6 could unfold over the next few days. Traders can find buying opportunities in such scenarios.