Chainlink Enters Consolidation Phase – What’s Next for the LINK Price?

By BeInCrypto October 31, 2023 In Chainlink

Chainlink (LINK) price has stagnated at the $11 range as bulls struggle to extend the rally further. On-chain analysis pinpoints 3 critical metrics that could trigger a prolonged consolidation phase in the days ahead.

Chainlink hit a 16-month peak of $11.50 during last week’s crypto market rally, but prices have stagnated since then. What are the major factors hindering further Chainlink price upside?

Chainlink Network Activity and New-User Acquisition Slow-Down

Chainlink donned the media spotlight last week as it raced up the crypto top gainers’ chart, hitting a new 16-month price peak in the process.

While holders have not embarked on a major profit-taking frenzy, on-chain data shows that Chainlink network activity has decreased considerably.

The CryptoQuant chart below shows that Chainlink recorded a 3-month peak of 8,086 Active Addresses on October 23. And barely 24 hours later, the LINK price rose to $11.50 for the first time since 2022.

However, since October 23, LINK Active Addresses have declined steadily, hitting 3,233 as of October 29. This marks a staggering 60% drop in daily network activity within a week.

The Daily Active Addresses metric estimates the rate at which existing users participate on a blockchain network. A decline in Active Addresses is often bearish, as it implies that the underlying services offered by the project are attracting lesser demand.

The chart above shows that Chainlink’s network activity has declined by 60% over the past week.

New Users Have Also Reduced Significantly as Network Growth Stalls

Chainlink’s price rally over the past month has been powered by the army of new users trooping into the ecosystem amid the Real World Assets (RWA) and Asset Tokenization wave.

However, recent on-chain data readings show that things have taken a negative turn over the past week.

According to Santiment, new addresses created on the Chainlink network have reduced significantly. The chart below shows that Chainlink Network Growth reached the 110-day peak of 2,465 on October 23.

But similar to the Active Addresses trend observed above, the Network Growth figures have also declined by 60% to hit 1,008 new addresses as of October 29.

Network Growth estimates the rate at which new users enter a blockchain ecosystem by tracking the number of new wallets created daily. Typically, a decline in Network Growth often impacts the underlying native token’s prices negatively.

Although the bullish market sentiment has propped up LINK price above the $11 support it’s only a matter of time before the bears begin to capitalize on the slowing network demand.

LINK Price Prediction: Further Consolidation Before Another Breakout

Within the current on-chain circumstances, Chainlink’s price could struggle to find sufficient demand to propel its current rally further. While the prevailing market sentiments are still largely positive, LINK price will likely consolidate around $10 rather than retest at $15.

The Exchange Order Books Chart also validates the prediction. It shows that the current number of active sell orders for Chainlink has now exceeded market demand by approximately 1.2 million LINK.

As depicted below, the bull’s most significant buy wall lies around the lower 5% price boundary, around $10.80. If that support level fails to hold, the bears could force a downswing toward $9.

Conversely, the bulls could negate that bearish narrative if they can reclaim the $15 mark. But as seen above, the bulls have mounted an initial sell wall at the higher 5% price boundary at $11.9.

If Chainlink’s network activity continues to decline, the resistance could prove as daunting as predicted.

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