Chainlink's LINK token has seen a slight 0.32% price decline over the past 24 hours, with the price decreasing from $6.24 to $6.22 as of September 17, 2023. However, zooming out reveals some interesting trends and insights into LINK's price action over the past few timeframes. In this technical analysis, we'll analyze the key metrics and trends to determine the current state of the market for LINK and where it may be headed next.
With a market capitalization of $3.46 billion, LINK remains one of the top 20 cryptocurrencies by market cap. Trading volume over the past 24 hours has been a modest $65.20 million, suggesting mild interest in LINK from traders. Over the past hour, LINK has seen a slight +0.07% uptick, but the general short-term trend remains neutral to slightly bearish.
Looking at the 1-day timeframe, LINK has posted a -0.32% loss, underperforming Bitcoin and Ethereum slightly, which are both down around -0.2% on the day. However, on the 7-day timeframe, LINK has outperformed with a +1.98% gain versus losses of -2% to -4% for Bitcoin and Ethereum.
The 1-month timeframe paints a decisively bearish picture, with LINK down -9.10% for the month so far. The 6-month view is also quite negative, with LINK posting a -13.97% decline over that longer timeframe. This indicates that despite the recent stabilization, LINK remains in a firm downtrend since putting in its 2022 high around $30 back in April.
Analyzing the LINK/USDT 4-hour chart reveals that LINK had been trading in a falling wedge pattern throughout most of September, indicating a period of lower highs and lower lows. On September 15th, LINK broke bullishly out of this falling wedge, but has struggled to see significant follow through upside momentum. The price hit resistance around $6.45 and has since pulled back to the $6.20 level where it is encountering support.
The 50-day moving average around $7.15 remains above the current price, indicating LINK is still in a macro downtrend on larger timeframes. For LINK to signal a real trend reversal, it would need to break out above the key $7.50 resistance level and the 50-day moving average with conviction and high trading volume.
LINK Price Outlook for the Rest of 2022
Looking ahead, LINK faces several challenges on the macro level. Rising interest rates and recession risks have drained risk appetite in crypto markets broadly. As a leading smart contract and oracle solution, LINK benefits from usage and adoption of DeFi protocols. During bull markets, hype drives heavy speculation and usage of DeFi. But in bear markets, interest and usage tends to decline. This macro dampening effect presents a headwind to major upside potential for LINK in the months ahead before blockchain adoption and usage fundamentally expand.
However, there are some positives for LINK moving forward. The Merge transition to proof-of-stake was completed successfully for Ethereum, which may drive renewed interest in crypto and DeFi as concerns around energy usage are mollified. Any return of risk appetite and uptrend in crypto markets broadly would likely lift LINK off its lows. But macro conditions indicate choppy rangebound action between $5.50 and $7.50 is the most likely scenario for LINK in Q4 this year. Into 2023, fundamental growth in DeFi and oracle usage could begin overcoming bearish sentiment and drive LINK decisively above its 2022 highs. But macro conditions indicate patience and longer timeframes may be required.
Will Chainlink Reach $10 Again in 2023?
Chainlink's all-time high price stands around $52, which was reached in May 2021 amid peak crypto market mania. Since then, LINK has seen an 80% decline, which is fairly typical of top altcoins in the aftermath of a bull market. While anything is possible in crypto markets, a return to $10 in 2023 would require a significant fundamental expansion in DeFi usage and adoption or a broader enthusiastic "echo bull" in crypto markets.
With the Fed still embarked on an aggressive tightening path, macro headwinds persist. And DeFi usage is unlikely to expand rapidly until bear market conditions abate. As such, a surge back to $10 for LINK appears unlikely in early 2023 barring unforeseen positive developments. The most plausible path forward is ranged accumulation between $5 to $8 until macro clarity returns. While certainly possible later in the year, hitting $10 again in 2023 seems an overly optimistic target for LINK at this stage in the market cycle. Patience and disciplined accumulation may be prudent rather than betting on a swift return to all-time highs.
Will DeFi Usage Expand Despite Crypto Bear Market?
The crypto bear market has severely dampened speculative hype and usage of DeFi protocols. Total value locked (TVL) across DeFi platforms has declined from over $200 billion to around $70 billion since late 2021. Declining asset prices and a risk-off environment has cooled the previously explosive growth.
However, the bear market also provides an opportunity for the most robust DeFi protocols to cement themselves and continue building user interest through market volatility. As blockchain technology improves and crypto gradually goes mainstream, the foundational usage of DeFi may start decoupling from speculative manias.
For DeFi to sustain growth throughout market cycles, delivering true utility and solving problems for users will be key. The current bear market is likely to reward platforms with sustainable value propositions while overly complex and speculative protocols fade away. So while usage has declined in the short-term, the long-term trajectory remains positive as technology progresses and awareness spreads. For LINK, this may ultimately support price rebounds as actual utility expands, rather than relying on hype and speculation during bull runs.
In summary, while LINK faces some challenging dynamics in the near-term, the fundamental growth story for decentralized oracles and DeFi remains compelling. As blockchain technology improves and awareness spreads, platforms like Chainlink that provide real utility have reasons for long-term optimism. But in the current risk-off environment, patience and discipline will likely be required. The path forward remains murky, but LINK has established itself as a leading oracle network and still benefits from substantial first-mover advantage in its niche. For traders and investors, balancing short-term prudence with long-term optimism may prove the most prudent strategy.