Akin to many in the altcoin market, Chainlink too witnessed a substantial price correction in the past week, after having shed over 27 percent of its trading price on 22 April. However since then, in the days that followed the coin was able to arrest the bearishness, stabilize the price and begin a recovery run. This has led to a 14 percent price hike in the past few days and the trend may continue in the coming week, provided there is much volatile movement from Bitcoin.
During this recovery run, it was interesting to note a fundamental change in the way in which the LINK market operates. Altcoins have always had a high correlation with Bitcoin and this has led to multiple corrections in the altcoin market in the recent past. Interestingly, data provided by IntoTheBlock highlighted a dramatic trend reversal in LINK’s market. In the past week, the BTC-LINK correlation fell from 0.86 to 0.31 and one could argue that this has also enabled the price to trigger a recovery run, even as BTC stalls around the $50k price point.
In the case of Chainlink’s derivatives offerings, Binance continues to dominate with the highest trading volumes, and taking a look at the funding rate can add greater clarity to the predominant market sentiment at the moment. The funding rate continues to remain positive for perpetual swaps at around 0.01 percent after having fallen from around 0.20 percent at the start of the month. This is still a bullish sign for LINK’s market and may substantiate the bullish momentum that may prevail in the coming week.
In a recent trend seen across the altcoin market, large accounts have reemerged as a key entity that can make or break upward price aspirations for most altcoins. LINK was exempt from this trend as reported in a previous article. However, despite the bearish turn of events in the past week, also taking into account the first leg of the recovery run that has been accomplished till now, the majority of LINK holders continue to be profitable in comparison to the price point they entered the market.
According to data provided by IntoTheBlock, at the current trading price of around $31 there are around 24.83k addresses amounting to over 4.9 percent of all holders that are in the break-even zone. The majority of LINK’s market participants are in the profit adding up to over 85.38% of total addresses and 427.48k addresses. While price corrections have been frequent in the past few months, with the gradual rise of volatility in the altcoin market, traders still occupy highly profitable positions, and hence the possibility of an upcoming sell-off in the coming week is likely to be limited.
In the coming month, if LINK were to continue on its recovery run, the decreasing correlation with BTC may, in turn, become an added layer of immunity against such corrections and an immense sign of relief for LINK’s short-term traders.
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