LINK’s Price: Buy Now or Wait?

• Chainlink’s LINK token has presented traders with a good buying opportunity. However, on-chain data suggests otherwise.
• Analysis of price movement and Bollinger Bands indicator suggests the asset may be oversold or undervalued in the short term.
• On-chain assessment of the token reveals the possibility of a prolonged decline in value.

Chainlink’s [LINK] Mixed Signals – To Buy or Not to Buy?

Good Buying Opportunity Suggested by Price Movement

A report by on-chain data provider Santiment stated that number of active developers contributing to leading oracle network Chainlink had reached an all-time high, while its native token LINK presented a good accumulation opportunity. An analysis of LINK’s price movement on a daily chart and consideration of its Bollinger Bands indicator showed that the asset’s price was trading close to the lower band of the indicator at press time, suggesting it may be oversold or undervalued in the short term – an ideal buying opportunity. Additionally, LINK’s Chaikin Money Flow (CMF) trended in an opposite direction than its price, creating a bullish divergence that often precedes a price correction.

On-Chain Data Indicates Prolonged Decline In Value

Although LINK’s price movements suggested potential for an upward move, an on-chain assessment revealed the possibility of a prolonged decline in value instead. According to Coinglass data, Open Interest declined persistently since 19 April and was currently pegged at negative $278 million at press time – indicating bearish sentiment among traders as well as reduced liquidity for trades involving LINK tokens. Moreover, total transaction fees paid have been steadily declining since mid May and were currently at their lowest levels since early February – another indication that traders are becoming more and more bearish on LINK tokens.

Analysis Of Network Activity Supports Bearish Outlook

Santiment also published findings regarding network activity surrounding Chainlink which further supported the bearish outlook on LINK tokens. The firm reported that usage rate for decentralized applications built on top of Chainlink had dropped significantly since March 2021 while there had been no major increase in active addresses or transactions related to these dapps either – both signs suggesting waning interest from users. Furthermore, risk adjusted returns for long positions taken out between 10 May and 13 May were found to be negative 0.8%, indicating unfavorable market conditions for buyers during this period as well.

Conclusion

Overall it appears that despite indications from technical analysis pointing towards potential gains if one were to buy into LINK tokens now, fundamental factors such as trading volume and user engagement suggest otherwise – implying that investors should tread carefully when considering opening positions with this asset class right now and wait until there is more clarity regarding future developments before taking any action..

Takeaway

Although technical analysis presents potential buying opportunities with Link tokens right now, fundamentals such as trading volume and user engagement suggest investors should proceed with caution when considering opening positions with this asset class right now