The cryptocurrency market is showing signs of recovery following a recent downturn, which is positively impacting the price of Chainlink. Additionally, as inflation in the US begins to stabilize, trading interest in Chainlink continues to grow. However, there are concerns that LINK may experience a correction soon due to being overvalued. This is attributed to a decrease in critical on-chain data, extinguishing hopes of further recovery.
Chainlink’s MVRV Drops Despite Recovery
Chainlink’s price has been experiencing a strong upward trend over the past few hours, surpassing the crucial $14 level and triggering significant liquidations. Data from Coinglass indicates that Chainlink saw $1.57 million in liquidations, with sellers liquidating over $1 million and buyers selling $470K worth of positions.
Despite the current recovery rally in Chainlink, the MVRV ratio stands at around 1.1, indicating a potential halt in the price surge. IntoTheBlock data shows a drop in Chainlink’s MVRV ratio from 1.42 to 1.13 as the LINK price recovers.
A declining MVRV ratio during a price increase suggests that the average token price at the last trade is not aligning with the current market price, possibly indicating speculative trading rather than real value appreciation. This situation may lead to Chainlink being overvalued as it surpasses resistance levels.
As a result, there is a likelihood of a correction in LINK’s price near the immediate Fibonacci channel. Despite this, Chainlink remains a prominent altcoin due to robust development activity and technical support.
The substantial accumulation by major investors, with 3 million purchases in the last five days, and high trading volumes reflect strong investor confidence. Furthermore, the 35% surge in open interest to $580 million demonstrates growing trader confidence.
What’s Next for LINK Price?
Chainlink continues to exhibit a strong upward trajectory, nearing the $15 resistance level amid considerable buying interest. This demand has enabled LINK to sustain above crucial Fibonacci support levels, with the price currently at $14.4 following an 11.52% increase in the last 24 hours.
LINK/USDT is encountering resistance around $14.7, where bearish sentiment may rise. With the Relative Strength Index (RSI) approaching the overbought threshold at 78, Chainlink could be heading towards a correction. A retest of the $14.7 level is likely, and breaking above it could pave the way for a move towards $17.6.
Conversely, heightened selling pressure at these resistance levels could nullify recent gains. Failure to breach the $14.7-$15 range may lead to a price decline to around $11.7, with further drops risking a significant correction.
Currently, with a long/short ratio of 2.17 indicating an uptick in buying sentiment, there is a possibility of a false breakout. Presently, 68.5% of traders anticipate further upward movement in LINK’s price.
