Chainlink: All the reasons why LINK’s impressive hike could witness a halt

• Historical data showed that LINK’s could undergo a correction after its double-digit rally.
• Buyers seemed fatigued but traders have kept more long positions open.

A mind-blogging 35% hike in Chainlink’s [LINK] value has kept the token in the spotlight in the last seven days. Interestingly, the rally may not come as a surprise to analysts like Michael van de Popple who seemed to have made it his duty in life to talk about LINK’s potential.

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However, the token’s impressive run might take a break, according to Ali Martinez, another analyst with 31,500 followers of X (formerly Twitter). According to Martinez, LINK has the potential to undergo a steep correction because of the 30-day Market Value to Realized Value (MVRV) ratio.

LINK has to adjust because…

The analyst did not just come to a conclusion without the necessary checks. Actually, Martinez took his data from on-chain data provider Santiment and tracked LINK’s historical data before arriving at the inference.

Data from @santimentfeed shows that the last three times #Chainlink MVRV 30D surpassed 20%, $LINK underwent a steep correction!

Notice that #LINK MVRV 30D recently surpassed 20%, suggesting an imminent correction. pic.twitter.com/CJ4ROy9EyK

— Ali (@ali_charts) October 22, 2023

By comparing the market capitalization and realized cap, the MVRV ratio can be used to get a sense of market profitability and a cryptocurrency’s fair value status. At press time, Chainlink’s MVRV ratio was 28.48%. Surely, this was confirmation that the token has put lots of holders in profit.

At the same time, an imminent correction could be in the way considering its history. Well, the LINK/USD four-hour chart showed that the token’s uptrend was starting to lose its dominance. This was because the hike to $10.83 was negated by a rejection and fell to $10.21.

Buyers are exhausted but others are sticking to the guns 

Another indicator that seems to support a correction is the Bollinger Bands (BB). Although the BB showed that LINK’s volatility had become extreme, it also revealed that the token was overbought. Proof of this is the upper band of the BB touching LINK at $10.75.

This condition was also shown by the Relative Strength Index (RSI) which was 74.65 at press time. With the RSI above 70, LINK had the tendency to retrace. Buyer exhaustion was also displayed by the Balance of Power (BOP).

Source: TradingView

For a start, an on-chain metric like the Weighted Sentiment was in the positive region at 1.60. This metric measures the acumen the market has toward a project using the positive and negative comments made on social media.

How much are 1,10,100 LINKs worth today?

Therefore, the value of Weighted Sentiment means that the bullish perception toward LINK was unwavering. Like the weighted sentiment, traders are also doubling down on an uptick for LINK. This was because of the Funding Rate which implies that longs are paying shorts a funding fee to keep their positions open.

Source: Santiment