Chainlink is one of the few altcoins which hasn’t marked a new all-time high (ATH) in almost a year. It is currently 73.39% down from its ATH in May 2021.
Chainlink is overvalued
While on the other hand, the coin’s Network value to transaction ratio is up by 365% from the same date. The value is also at its highest since February 2020. It simply indicates that LINK at the moment is highly overvalued. And, this can’t be considered a good sign for the coin.
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Historically, higher value accompanied by low on-chain movement has resulted in price plunging, and that is what has been happening for the last 11 months now.
Consequently, LINK is trading at $14.02, stuck once again in the downtrend with all the indicators hinting at a further fall in the near future.
The Parabolic SAR’s white dots have been hovering well above the candlesticks for a week now. And, the ADX, which was supporting the uptrend has lost its strength post-February 2022.
Should ADX rise above 25.0 in a downtrend, LINK will fall through the lower trend line of the 11-month long downtrend wedge.
This will force the investors to witness much higher losses. Thus, the confidence and interest of LINK holders might decline to a great extent.
In fact, over 412k investors are already facing losses. Furthermore, a significant portion of them are simply waiting for a recovery of 24% since these investors bought their holdings at around $14 to $16.
Now, investors in the $14-$16 zone hold about 40.5 million LINK worth almost $570 million. Once LINK crosses the $16 mark, these 40.5 million LINK will be saved from losses even if the investors don’t see profits.
However, it should be noted that smart investors cashed out at the right time soon after the 42% rally of March. As a result, most of the transactions last month were in profit.
Well, after the network-wide supply of LINK fell into losses a few days ago, on-chain transactions might witness a state of complacency until the trend reverses.
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