Chainlink Price at Risk of Further Decline as 200 Largest Addresses Sit on Unrealized Profits

• Chainlink ecosystem’s 200 largest wallet addresses scooped up 40.18 million LINK tokens in October. 

• Large wallet investors accumulated LINK at $7.40, the altcoin’s price has nearly doubled in the past month. 

• LINK price is at risk of correcting lower with bearish divergence in on-chain metrics. 

Chainlink price is in an uptrend that started in September. LINK price rallied nearly 60% in the last 30 days, before beginning its recent pullback. LINK price is down 2% on the day, there is a likelihood of further decline in the altcoin’s price, in the near term. 

Chainlink large wallet addresses could shed their holdings

Chainlink’s 200 largest wallet contain 40.18 million LINK tokens, worth $570.15 million at the current price ($14.19 per LINK token) on October 17, according to Santiment data. The crypto intelligence tracker noted that post the accumulation by LINK whales, the asset’s price rallied 125% within a 25-day timeframe, pushing the price from $7.40 to $14.60, a 94.6% gain. 

While LINK price nearly doubled, the wallets holding Chainlink tokens have yet to shed their holdings or engage in profit taking. The LINK token balance of these wallet addresses has remained high since October 17, pointing to an increased chance of a profit-taking event in the near future. When LINK whales shed their holdings and book unrealized profits, the selling pressure on Chainlink could push the asset’s price lower. 

Chainlink whales sit on unrealized profits, Source: Santiment.

On-chain metrics, Active Addresses and Network Realized Profit/Loss, support the bearish scenario. While LINK price nearly doubled in a 25-day timeframe, active addresses did not climb accordingly, revealing an underlying bearish divergence in LINK. 

LINK Active Addresses and price, Source: Santiment.

The Network Realized Profit/Loss metric that notes whether market participants selling the asset are realizing profits or realizing losses, supports the bearish thesis. LINK holders have engaged in profit-taking, represented by the spikes in the chart below. Profit-taking activities are typically followed by a correction in the asset’s price, suggesting the possibility of more downside. 

LINK price and Network Realized Profit/Loss, Source: Santiment.

The exchange flow balance, a metric that notes the netflow from cryptocurrency exchange platforms and the supply on exchanges as a % of total supply, are used to identify whether there is incoming selling pressure on the asset. This helps determine the likely direction of the price trend. In the case of LINK, on the monthly time frame, there are large inflows, the volume of Chainlink token inflows is higher than outflows, as seen in the chart below.

At the same time, the supply on exchanges increased to 15.29% of the total supply, as on Tuesday. LINK tokens are flowing into exchanges, consistently, contributing to the rise in the % of total supply across exchange platforms, this points at a brewing selling pressure on the asset. If the inflow of LINK to exchanges continues, it could result in a decline in the asset’s price. 

Chainlink supply on exchanges and exchange flow balance, Source: Santiment.

At the time of writing, LINK price is $14.08 on Binance, the asset is down 2% on the day.