- LINK’s Age Consumed surged significantly, helping the token rebound.
- Overbought could push the price back to $17.50.
The price of Chainlink (LINK) has surged 17% in the past 24 hours, making the cryptocurrency the best-performing altcoin over the period. But AMBCrypto’s research shows that the increase was not without reason.
Instead, several events occurred behind the scenes that sparked the altcoin rally. Based on our findings, we confirm that the influx of LINK tokens into network circulation is one of the catalysts.
The sleeping wallet wakes up
Santiment mentioned in a post on February 1 that approximately 5.38 billion coins in dormant wallets were revived. The increase in wallets means that age indicators of consumption have skyrocketed.
🔗📈 #Chainlink jumped ahead #altcoin Some previously dormant wallets used the pack after generating the highest Age Consumed spike (5.38B, calculated by multiplying the number of coins moved by the number of days the coins were dormant). This influx is $LINK back in
(Continued) 👇 pic.twitter.com/eHVpeJz2HW
— Santiment (@santimentfeed) February 1, 2024
Additionally, the surge in consumption ages reflects how changes in the short-term behavior of long-term holders have occurred. It also typically triggers a bounce ahead of a market bottom.
But that wasn’t the only reason. On-chain data shows that some addresses have liquidated their LINK holdings. Typically, this means that there was some level of fear, uncertainty, and doubt (FUD) going into the project. However, FUD is not always a bad thing, which suggests that the action has increased the price of Chainlink tokens.
At press time, LINK’s price was $18.03, its highest in nearly six weeks. Despite the hike, Network Value to Transactions (NVT) signals showed that prices may recover soon.
Chainlink’s NVT signal rose to 40.75, according to AMBCrypto’s analysis of Glassnode data. This indicator uses a 90-day moving average (MA) to figure out when investors are pricing in a premium.
Historically low NVT signals serve as a period to acquire tokens and in most cases coincide with market bottoms.
Source: Glassnode
However, a high NVT signal means it may be time to deploy and the market may have reached a local high. For Chainlink, there is a possibility of a price slowdown. If this happens, LINK could fall below $18.
LINK aims to cool off for a while.
AMBCrypto’s analysis of the LINK/USD 4-hours chart shows that bulls have taken advantage of support at $15. Increasing buying pressure could allow the cryptocurrency to surge past the $16 resistance level.
However, signs from the Bollinger Bands (BB) suggest that LINK may have reached an overbought condition. This is because the BB upper band touched LINK’s price of $18. Although volatility increased, LINK began to retreat as the price fell to $17.75.
The relative strength index (RSI) also confirmed this sentiment at 77.01. An RSI value above 70 indicates that the token is overbought and could signal a retracement.
Source: TradingView
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A reading below 30 would have tagged it as oversold, which may have triggered a bounce.
LINK may fall to $17.50 for the time being. However, a move below $17 seemed unlikely as buying pressure could help it target $18 once again.