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"Chainlink's $22 Test: Bulls or Bears?"

Coin WorldMonday, Jan 27, 2025 9:36 pm ET

1min read

Chainlink (LINK) is facing a critical test of support at the $22 level amidst a broader decline in the crypto market and diverging investor sentiments. The overall crypto market is experiencing a downturn, potentially due to expectations around the first U.S. FOMC meeting of the year, a drop in U.S. stock futures, and DeepSeek panic selling. Chainlink has not been spared from this market-wide downturn, as it recently broke through the 4-hour timeframe support at $24, indicating a shift in market sentiment.

Following this breakthrough, Chainlink tested the $22 zone, which serves as a critical support level to maintain the price above the $20 threshold. LINK showed several instances of breaks of structure (BOS) and equilibrium points, with the latest BOS leading to a fall towards $22. If bulls do not intervene soon, Chainlink risks a further decline below this pivotal $22 support, potentially testing lower supports below $20. A sustained move below $20 could trigger a more significant sell-off towards the $18 level, a past support zone.

Conversely, if buying pressure resumes, we might see LINK recover above the $22 level and attempt to breach the previous resistances above $24 again. The key for LINK’s short-term trajectory will be its ability to hold above these crucial support zones. Failure to do so could exacerbate the bearish momentum, while a resurgence of bulls could stabilize the decline and set the stage for a rebound towards higher resistances. The market’s response in the coming sessions will be crucial in determining Chainlink’s path forward.

Despite a notable 103% increase in transaction count in the last 24 hours, the overall weekly count has dropped by 53%. This decrease in transaction activity could suggest a waning interest or a consolidation phase after a significant spike. Historically, such a drop in inflows has often preceded further declines in price. If this pattern holds, LINK could face continued downward pressure in the near term. Future implications hinge on whether transaction volumes can stabilize or resume an upward trajectory, potentially influencing a price recovery.

Market sentiment around LINK remains divided. While general crowd sentiment is moderately bullish at 1.65, the more bearish stance of market professionals or ‘smart money’ is at -0.76. This

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