Chainlink (LINK) recently retested its $12.5 breakout zone, indicating a possible bearish continuation. On-chain and liquidation data supported the idea of further downside potential towards the $10 and $7.5 levels. The altcoin’s price action has been testing a key resistance zone around $12.5, which previously acted as a key support level. This retest of the breakout zone may now flip into resistance, suggesting a lack of conviction on the bullish side.
If the bulls do not maintain the critical $12.5 price level, LINK could see a more significant pullback. The broader market remains indecisive, and the recent retracement of Chainlink’s price has been within expectations. The price has also failed to post a higher high after topping near $16, highlighting a weakening structure. Retesting the descending trendline at around $12.5 without a convincing bounce further adds to the bearish setup of LINK.
On-chain data does not provide much reassurance to LINK’s bulls at the moment. According to CryptoQuant, the net deposits for the altcoin on exchanges are slightly above their 7-day average, indicating heightened selling pressure. Higher net deposits typically represent investors pulling funds from decentralized exchanges and sending them to centralized exchanges to sell. This bearish technical outlook combined with the increase in net deposits may justify LINK’s current bearish bias on the charts.
Liquidation heatmaps also point towards a further drop in LINK’s price, with a cluster of long liquidation levels near the $10 mark. Market makers tend to target these liquidity zones during periods of uncertainty. If LINK moves towards $10 and triggers liquidations, the selling pressure could lead to a cascade of events. A push towards $7.5, which was Q4 2023’s previous high, becomes probable under these conditions. To avoid deeper losses, LINK must hold the $12.5 zone, as elevated exchange deposits and visible liquidation pools below suggest a southward direction for now.
In conclusion, LINK’s recent retest of the $12.5 breakout zone indicates a potential bearish continuation, with on-chain and liquidation data supporting further downside towards $10 and $7.5 levels. The altcoin’s price action suggests a lack of bullish conviction, and failure to maintain the critical $12.5 level could lead to a more significant pullback. On-chain data shows heightened selling pressure, while liquidation heatmaps hint at a further drop in LINK’s price, with potential liquidation clusters near $10. It is essential for LINK to hold the $12.5 zone to avoid deeper losses, as market dynamics currently favor a southward trajectory. Investors and traders should closely monitor these key levels and data points to make informed decisions regarding their LINK holdings.
