Yesterday, August 5, LINK, the native coin of Chainlink, a decentralized oracle provider, fell to its lowest level in six months. Changing hands around $8, LINK fell 64% from its March highs, breaking out of a bullish flag, signaling weakness. The correction was widespread, and leading altcoins such as Solana and Cardano also recorded steep losses.
LINK holders accumulate, exchange outflows increase
However, as markets bled, breaking below key support levels, smart investors saw this as an opportunity to accumulate. According to IntoTheBlock data Yesterday, August 6th, there was a sharp increase in the number of active LINK addresses, rising to levels not seen in about three months.
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The increase in active addresses coincided with a surge in exchange outflows. This development suggests that users were more interested in accumulating LINK rather than selling, despite the asset’s falling prices.
Outflows from centralized exchanges like Binance and Coinbase are generally considered net positive. With users controlling coins through their non-custodial wallets, they cannot readily sell for other liquid coins or stablecoins.
Over the years, prices have tended to rally steadily whenever there is extreme fear, especially among LINK holders. Much like the events of March 2020, when cryptocurrency prices plummeted due to a COVID-19-led crash, aggressive investors may view such dips as a buying opportunity.
In March 2020, LINK dropped a staggering 70%. However, months later, as the money printers were turned on, cryptocurrency prices surged, sending LINK up nearly 35x to its 2021 peak.
Similar to what happened then, the drop in prices, coupled with exchange outflows and accumulation among entities, makes it likely that LINK will recover strongly.
Most of the headlines are in red, But Partners are interested in Chainlink solutions
So far, IntoTheBlock data reveals that 65% of LINK holders are at a loss, and only 32% are in the green. Encouragingly, however, the majority of LINK holders are “diamond hands” and have held their stash for over a year.
The more long-term holders or addresses that hold the coin or token for more than 155 days, the more resilient the prices will be in the sell-off wave.
Beyond the price action, optimism is high among LINK holders. Chainlink is a leading decentralized oracle provider that offers services for DeFi and NFT protocols.
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Meanwhile, middleware developer Chainlink Labs continues to forge quality partnerships. Recently, 21Shares integrated Chainlink Proof of Reserve into Ethereum to increase transparency.
Featured image by DALLE, chart by TradingView