Chainlink [LINK] Faces 17% Drop Risk Amid Bearish Sentiment

Chainlink [LINK] has been under significant pressure due to escalating tariff tensions, struggling to gain momentum over the past week. Traders have shown a strong bearish outlook, with on-chain data revealing that traders are heavily leaning towards short positions. As of the 8th of July, traders were over-leveraged at $12.99 on the lower side and $13.83 on the upper side, indicating strong interest at these levels. On-chain data showed that traders have built $5.87 million worth of long positions and $8.64 million worth of short positions, with LINK's Long/Short Ratio standing at 0.935. This means that 48.32% of traders were betting on long positions, while 51.68% were positioned short at press time, suggesting a bearish sentiment and a potential price drop for LINK.

At the time of reporting, LINK was trading near $13.49, having recorded a modest price dip of over 0.55% in the past 24 hours. This price drop amid tariff tensions has reinforced the bearish outlook among traders and reduced investor and trader participation. The asset has been consolidating within a tight range for over two weeks and has now reached a key resistance level, formed by a descending trendline. Historically, whenever the price has reached this level, it has faced rejection and recorded a decline. This marks the fourth time the asset has tested this resistance. If market sentiment remains unchanged and the price drops below the $12.70 level, a potential 17% decline could follow. On the other hand, if sentiment shifts and the price breaks above this prolonged resistance and closes a daily candle above the trendline, it could open the path for a strong upside rally. At press time, LINK is trading below the 200-day Exponential Moving Average (EMA) on the daily time frame, indicating that the asset is in a downtrend. This trend could only reverse if the price breaks above the 200 EMA and the $16 resistance level.