From concerning on-chain metrics to technical indicators, Chainlink’s (LINK) price might encounter a rough path as it aims for a higher value. These warning signs came after the token recently showed readiness to reach $12.
On Tuesday, September 11, Chainlink's Sharpe ratio was nearing a higher level. However, the ratio, which measures whether the risk taken in investing is worth the potential reward, has dropped to 0.25. When the Sharpe ratio rises, it suggests a likely positive return on investment. Conversely, a decline or negative reading indicates that the volatility of the asset may not justify the risk-adjusted returns.
Another metric displaying such sentiment is Chainlink’s network activity. According to IntoTheBlock, the active, zero-balance, and new addresses have decreased significantly in the last seven days. An increase in these metrics indicated a high level of user engagement, which is typically a bullish sign. Thus, this decline indicates that fewer market participants are utilizing the network. This reduction in activity could negatively impact Chainlink’s price, especially as it coincides with decreased trading volume.
An analysis of the daily chart shows that LINK’s price last exceeded $12 on August 25. Two weeks later, it dropped by 22%, falling below $10. While the altcoin has since rebounded, BeInCrypto noted potential resistance at $10.74. Furthermore, the Chaikin Money Flow (CMF) failed to rise above the zero midpoint, crucial for determining whether a cryptocurrency is entering an uptrend or downtrend. A falling CMF suggests a downtrend.
If the CMF continues to fall, it could indicate increased profit-taking from the recent price surge. Consequently, LINK’s price could drop to $9.47, with a highly bearish scenario potentially bringing the token down to $8.08. However, if the broader market shifts into a sustained bullish phase, LINK could rise to $12.33.
