Key Takeaways
What triggered the recent downward pressure on Chainlink’s price?
The market crash, combined with the Chainlink team unlocking and depositing 18.75 million tokens into Binance, intensified selling pressure.
What do technical indicators suggest about LINK’s short-term outlook?
With the Stochastic RSI at 18 and DMI at 8, LINK shows strong bearish momentum and could drop to $15.5 if conditions persist.
After the market crash, Chainlink [LINK] plummeted 65.3% to a 2-year low of $7.9 before rebounding. At press time, Chainlink was trading at $17.39, marking a 21.89% decline on the daily charts.
Amid this market breakdown, the Chainlink team made a very unexpected move, causing further market tension.
Chainlink team unlocks 18.75 million tokens
Surprisingly, amid market turmoil, the Chainlink team unlocked 18.75 million tokens, from non-circulating supply, worth $387 million according to Onchain Lens.
Shortly after, the team deposited these tokens into Binance after a 4-month dormancy. When non-circulating supply enters circulation, it negatively impacts price in the short term if demand fails to match.
Typically, moving tokens into exchanges precedes selling activity, which in turn causes intense downward pressure on an asset.
Historically, Chainlink wallet transfers have aligned with periods of poor performance on LINK’s price charts.
Retail investors also dump aggressively
Interestingly, as the market started to decline, small-scale investors on the spot market also rushed to cash out.
According to Coinalyze, Chainlink recorded 11.46 million in sell volume, compared to 10.1 million. As a result, the market recorded a negative buy-sell delta of -1.36 million, a clear sign of aggressive selling.
Source: Coinalyze
Furthermore, exchange activity also echoed this selling trend. On the 10th of October, Exchange inflow reached a 7-month high of 16.4 million, before dropping to 2 million on the 11th of October.
Source: CryptoQuant
As a result, Exchanges Netflow also jumped to a 7-month high of 9.3 million tokens before dropping to -873.5k at press time.
Often, increased selling activity has historically preceded lower prices, which explains the phenomenon witnessed over the past day.
Futures slip significantly!
As expected, following the market crash, investors panicked and pulled out capital, while others were forcibly liquidated.
On the 10th of October, CoinGlass reported a sharp spike in liquidation activity, with $167.34 million in long positions and $15.4 million in short positions wiped out.
Source: CoinGlass
This trend continued on the 11th of October, with $1.2 million in liquidation. In total, $183.94 million worth of futures positions were liquidated over the past 24 hours.
Meanwhile, Open Interest (OI) dropped 47.79% to $717.35 million, while Derivatives Volume jumped 222.9% to $5.3 billion. When OI drops, it indicates reduced new position openings in the market.
Source: CoinGlass
Surprisingly, examining Derivatives data, AMBCrypto determined that the volume uptick was driven by demand for short positions.
At press time, this ratio fell to 0.91, signaling that most participants are bearish and betting for prices to drop further.
More losses ahead for LINK?
According to AMBCrypto, Chainlink plunged as the broader market crashed, followed by massive exchange deposits from the non-circulating supply wallet.
These market conditions resulted in massive downward pressure on LINK’s price charts. For that reason, its Stochastic RSI dropped to 18, at press time, hitting oversold territory.
Source: TradingView
At the same time, its Directional Movement Index (DMI) plummeted to 8, further validating this trend shift.
Typically, when momentum indicators hit such lows, it signals strong downward momentum and its continuation potential.
Therefore, if current market conditions persist, LINK could drop to $15.5. However, if the wider crypto market rebounds, as buyers buy the dip while macroeconomic uncertainty cools down, LINK will eye to reclaim $22.
