- Chainlink reclaimed the range highs as support and exhibited a bullish structure.
- The market bottom and steady demand in recent weeks meant investors would be hopeful of an extended rally.
Chainlink [LINK] had broken out of a two-month range formation and witnessed increased buying pressure recently.
The MVRV metric showed that the Chainlink market might have bottomed. If the bullish conditions persist, the token could yield higher returns in the coming months.
Source: Glassnode
For the uninitiated, the MVRV Z-Score is a metric that evaluates whether an asset is undervalued or overvalued relative to its “fair value”.
Historically, bottoms appear when market value drops well below realized (i.e., total invested) value.
The MVRV Z-Score’s drop into the green zone occurred last on the 8th of April. At that time, the price of Chainlink was at $11.3. Since then, LINK has rallied 49.5%.
The bullishness around Bitcoin [BTC] has also helped the altcoin’s cause.
LINK movement on-chain signaled distribution trends
Source: LINK/USDT on TradingView
From a price structure lens, LINK broke past the $15.52 range high established in February (highlighted in white).
The recent breakout beyond the local high saw the token retest the 61.8% Fibonacci retracement level at $18. The $18 retest failed, yet bullish momentum suggests another push is likely.
However, momentum didn’t vanish.
Demand still dominates
Since April, the A/D indicator has been rising, signaling strong and sustained market demand for LINK. This demand could drive LINK’s price higher, marking a clear reversal from its six-month downtrend.
With bullish momentum intact, the token may have room for another upward move.
However, there were some warning signs for the coin that could signal potential challenges ahead.
The Mean Coin Age reflected that network-wide accumulation was difficult to maintain. Since mid-March, LINK has seen multiple waves of heavy selling.
The swift drops in the MCA attest to this. The 180-day MVRV ratio was below zero, showing long-term holders were still at a loss.
The Network Volume to Transactions (NVT) Ratio fell rapidly over the past week. Yet, its spiky behavior since March points to irregular transaction volumes.
At press time, high volume transfer bolstered investor spirits, and the token was not overvalued according to the NVT.
