Chainlink Traders Capitulate After 10% Plunge: Bottom Here?

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As a long-term Chainlink investor, I’ve seen my fair share of market volatility and price swings. However, the recent on-chain data indicating significant losses realized by LINK investors and a large spike in loss-taking and dormant coin movement has put me on high alert.

As a Chainlink investor, I’ve noticed that recent on-chain data indicates we’ve been incurring substantial losses. This trend suggests that the steep price decline has left many of us feeling uneasy and uncertain about our investments.

Chainlink FUD Could Lead Towards Bottom Formation

As a data analyst at Santiment, I’ve been closely monitoring the on-chain behavior of Chainlink (LINK) investors. Notably, recent data reveals that this group has experienced their most significant capitulation event in 2021. This observation is based on the “Network Realized Profit/Loss” indicator, which measures the current net profit or loss realized by Chainlink traders in the market.

The metric examines the blockchain transaction history of each coin that’s being sold to determine its previous selling price. If the coin was moved at a lower price before this current sale, then a profit has been made on that transaction when compared to the current market price.

In simple terms, when you trade coins that are different from what you currently have, those trades result in realizing losses rather than gains. The profit and loss figures from all transactions across the entire network are accumulated and then subtracted to determine the overall net position.

When the Network Realized Profit/Loss is positive, this signifies that collectively, investors are making a profit from their investments. Conversely, when the Network Realized Profit/Loss is negative, it implies that losses are more common than gains among investors in the market.

Here’s a chart illustrating the development of Chainlink Network’s Realized Profit/Loss during the previous months.

Chainlink Traders Capitulate After 10% Plunge: Bottom Here?

I’ve noticed in the chart before us that my Chainlink investments have incurred significant losses lately, as indicated by the sharp downturn in the Network Realized Profit/Loss line.

Over the past few weeks, the value of LINK cryptocurrency has experienced a substantial decline, resulting in considerable losses for its traders. In fact, the coin has dropped nearly 10% within the last week.

Based on the current market conditions, it seems that these investors have become so fearful of the downturn in prices that they have chosen to sell their investments at a loss.

As an analyst, I’ve noticed that in the very same graph, the analytics team has included additional data for a different metric referred to as “Age Consumed.” This particular metric monitors the movement of previously inactive digital coins.

This indicator appeared to surge in tandem with the sell-off by investors, suggesting that even some previously unwilling sellers were compelled to join the market exit due to the significant price drop.

The anxiety and uncertainty (FUD) prevalent in the market could actually work in favor of Chainlink. Based on historical trends, the asset tends to reach its lowest point when investor fear is at its peak. As evidenced by Santiment’s graph, a significant red spike in this indicator has historically signaled a bullish trend for LINK, as seen in April.

LINK Price

Chainlink is trading around $12.8 when writing, down around 3% over the last 24 hours.

Chainlink Traders Capitulate After 10% Plunge: Bottom Here?

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2024-07-11 00:40