Price Analysis

Chainlink Price Rare Chart Pattern Points To A 35% Crash

Chainlink price has formed a head and shoulders chart pattern on the 4H chart, pointing to more downside in the near term
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Chainlink Price Rare Chart Pattern Points To A 35% Crash

Highlights

  • Chainlink price formed a head and shoulders chart pattern on the 4H chart.
  • It has dropped to that pattern’s neckline, which coincides with the 50% retracement.
  • This pattern, together with the death cross, points to more downside.

Chainlink price has nosedived this month, and a rare chart pattern on the 4H chart points to more downside as we enter into 2025. Despite its strong fundamentals, LINK has crashed by 35% from its December highs, mirroring the performance of Bitcoin and other altcoins.

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Chainlink Price Analysis: H&S Points To More Downside

The 4H chart shows that the LINK price rallied and peaked at $31 in December as Bitcoin and other altcoins rallied. It has formed a head-and-shoulders chart pattern and is now hovering at its neckline. 

An H&S pattern is a popular reversal sign that comprises a head, two shoulders, and a neckline. In this case, the head was at $31, while the two shoulders were around the 23.6% Fibonacci Retracement level at $26.10. This pattern’s neckline is at the 50% retracement point and the weak, stop & reverse of the Murrey Math Lines. 

Chainlink price also formed a death cross on December 22 as the 200-period and 50-period Weighted Moving Averages (WMA) flipped each other. Also, the Percentage Price Oscillator (PPO), which is a modified type of the MACD indicator, has moved below the zero line and is pointing downwards. 

Therefore, these patterns point to a big drop in the next few days. The distance between the head and the neck is about 35%, while a similar distance from the neckline points to a LINK price crash to $13.25. 

Chainlink Price Chart

Conversely, a move above the major S&R pivot point at $25, which is along the right shoulder, will invalidate the LINK price forecast. Such a move will validate the slow formation of a falling wedge pattern between December 24. A wedge is a popular bullish reversal pattern.

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LINK Falls As Total Value Secured Slips

Chainlink price retreat has coincided with the ongoing retreat of other DeFi tokens like AAVE, Uniswap, and Compound.

At the same time, ecosystem data shows that the total value secured in the network has tracked downward in the past few days. This figure peaked at $41 billion earlier this month and then retreated to $35 billion. Most networks in its ecosystem, like Spark, Eigenpie, AAVE V2, and GMX have shed assets. 

Chainlink Open Interest

More data by IntoTheBlock shows that the Chainlink open interest in the futures market has fallen in the past two weeks. The interest stood at $1.48 billion on December 30th from this month’s high of $2.8 billion. That is a sign that Chainlink is having soft demand in the futures market. 

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Frequently Asked Questions

Why has the Chainlink price crashed?

Chainlink price has dropped because of its correlation with Bitcoin, which has slipped sharply in the past few weeks. It has also fallen as investors who benefited during its uptrend start to take profits.

Why is the LINK price forecast bearish?

The token has formed a head and shoulders pattern, which may lead to more downside in the next few weeks. It also formed a death cross as the 200-period and 50-period moving average crossed each other.

Is it safe to buy Chainlink now?

While Chainlink has solid fundamentals, its technicals point to more downside in the next few weeks.
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crispus

Crispus is a seasoned Financial Analyst at CoinGape with over 12 years of experience. He focuses on Bitcoin and other altcoins, covering the intersection of news and analysis. His insights have been featured on renowned platforms such as BanklessTimes, CoinJournal, HypeIndex, SeekingAlpha, Forbes, InvestingCube, Investing.com, and MoneyTransfers.com.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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