An analyst at X grades that Chainlink is facing a tug of war between bullish momentum and strong upward resistance from profit-seeking traders. For bulls to increase their long positions and extend the upward trend, the existing excess supply must be eliminated, paving the way for further gains above immediate liquidation levels.
Profits slowing LINK Bulls
Looking at LINK’s price action on the daily chart, it is clear that buyers have the upper hand. The bulls have been relentless since the token bottomed in September 2023.
Since then, LINK has doubled, even surpassing the round psychological figure of $20. So far, buyers are still in control, returning to the trend despite the market-wide cooldown following Bitcoin’s crash last week .
LINK is within a wider range, with clear boundaries around $17.9 at the low end and $21.7 at the high end. Following the prolonged expansion from September onwards, the emergence of a variable market may suggest that traders are exiting their positions, slowing the upward trend.
This was confirmed by the network data marked by the analyst, explaining the recent slowdown. In fact, on-chain data suggests that investors have been profiting from the recent expansion.
As a result, the excess supply needs to be absorbed by the market before LINK Bulls gain enough momentum to take the coin to new 2024 highs above $21.8.
Chainlink CCIP Adoption to Recharge Demand?
Despite short-term headwinds, Chainlink bulls are betting on widespread adoption of the Chainlink Cross-Chain Interoperability Protocol (CCIP) as a demand catalyst. CCIP is fundamental to blockchain interoperability. The solution enables secure communication between linked blockchain smart contracts and external data sources.
CCIP has been adopted by, among others, Metis, a layer 2 scaling solution for Ethereum. Circle, issuer of USDC, a stablecoin, is also leveraging the platform to improve interoperability.
Recent data shows an increase in CCIP revenue, pointing to greater adoption of this multichain bridge platform. On March 26, data from Dune Analytics show that CCIP generated more than $484,000 in revenue. This number will likely increase as CCIP is adopted and Chainlink integrates with even more protocols, businesses, and blockchains.
Still, the pace at which LINK surpasses March highs and records new highs in 2024 will also require the performance of other currencies, including Bitcoin and Ethereum. A resurgent BTC could attract more capital, lifting altcoins, including LINK, in the process.
Featured image from Shutterstock, chart from TradingView
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