Chainlink Faces Bearish Trend, Tests $12.5 Resistance

Chainlink, a prominent cryptocurrency, is currently facing a critical juncture as it retests the $12.5 level, which previously served as a support zone. This retesting phase suggests a potential shift where the support level could transform into resistance, indicating a bearish trend. On-chain data and liquidation metrics further support this bearish outlook, hinting at a possible decline towards $10 or even $7.5.

The altcoin has been experiencing a consistent decline over the past week, testing a key resistance zone around $12.5. This level, which previously acted as a support, now appears to be a resistance, signaling a lack of bullish conviction. The broader market's indecisiveness and Chainlink's recent retracement align with this bearish sentiment. The price has not managed to post a higher high after topping near $16, and retesting the descending trendline at around $12.5 without a convincing bounce is a sign of a weakening structure.

On-chain data provides little reassurance for LINK's bulls. Net deposits for the altcoin on exchanges are slightly above their 7-day average, indicating heightened selling pressure. Higher net deposits typically suggest investors are moving funds from decentralized exchanges to centralized exchanges with the intention to sell. This uptick, though not exceeding limits, coincides with a bearish technical outlook, further justifying LINK's bearish bias.

Leveraged traders may also influence LINK's price trajectory. Liquidation heatmaps reveal a cluster of long liquidation levels near the $10 mark. Market makers often target these liquidity zones during periods of uncertainty. If LINK moves towards $10, triggering liquidations, the resulting selling pressure could cascade, making another push to $7.5—Q4 2023’s previous high—more probable.

The $12.5 zone must hold to avoid deeper losses. With elevated exchange deposits and visible liquidation pools below, the path of least resistance for LINK is currently southward. This bearish outlook underscores the importance of monitoring key support and resistance levels, as well as on-chain data, to navigate the volatile cryptocurrency market effectively.