Chainlink (LINK) has experienced a significant price drop recently, losing 18% of its value in just 12 days. This decline has erased most of the gains made in August and the altcoin is now approaching a critical support level.
The Relative Strength Index (RSI) indicates growing selling pressure as it continues to fall. Historically, an RSI below 30 signals an oversold asset, but at this stage, it suggests that the selling pressure is not yet over.
Chainlink’s Network Value to Transactions (NVT) ratio supports the bearish momentum. The NVT ratio indicates that the asset is overvalued relative to its network activity, signaling a potential correction.
The price of Chainlink dropped as the NVT ratio began to rise, showing a disconnect between the investors' optimism and the actual network activity. This suggests further declines if the market adjusts to the true value of the asset.
Currently, LINK is trading at $10.01, having fallen through its crucial support level of $10.79 and approaching another significant support level at $9.35. If the bearish trend continues, LINK could test this level again.
If the overvaluation and decreasing RSI persist, further declines are likely. However, if LINK manages to reclaim the $10.79 support level, the bearish outlook could be reversed.
