Yesterday, August 5, LINK, the native currency of Chainlink, a decentralized Oracle provider, plunged to a six-month low. Trading around $8, LINK fell by 64% from its March highs, breaking out from a bull flag and signaling market weakness. The correction affected the broader cryptocurrency market, with leading altcoins like Solana and Cardano also experiencing sharp losses.
However, amidst the market downturn and the breach of key support levels, savvy investors seized the moment to accumulate LINK. According to data from IntoTheBlock on August 6, the number of active LINK addresses surged to levels not seen in approximately three months. This increase in activity coincided with a significant spike in outflows from exchanges, indicating that users were keen to accumulate LINK rather than sell, despite the falling asset prices.
Outflows from centralized exchanges like Binance and Coinbase are generally considered a positive sign. When users transfer their coins to non-custodial wallets, they are less likely to sell them for other liquid coins or stablecoins. Historically, prices tend to recover steadily after periods of extreme fear, particularly among LINK holders. Similar to the market collapse in March 2020 due to the COVID-19 pandemic, when LINK plummeted by 70%, aggressive investors saw an opportunity. LINK subsequently surged nearly 35-fold by its peak in 2021.
Currently, Chainlink’s price is trending downward on the daily chart. Despite this, the ongoing outflows from exchanges and accumulation among entities suggest that LINK could bounce back strongly, mirroring past recoveries.
Data from IntoTheBlock shows that around 65% of LINK holders are currently incurring losses, while only 32% are in profit. Nonetheless, the majority of LINK holders appear to be steadfast, with many holding their assets for over a year. The presence of long-term holders often lends resilience to prices during market liquidations.
In addition to price dynamics, there is growing optimism among LINK holders. Chainlink remains a leading decentralized oracle provider, offering critical services to DeFi and NFT protocols. Chainlink Labs, the platform’s middleware developer, continues to form strategic partnerships. Recently, 21Shares integrated Chainlink’s Proof-of-Reserve on Ethereum to enhance transparency.
As the market navigates through this tumultuous period, the strategic moves by Chainlink and the unwavering confidence of its holders might pave the way for a robust recovery.
