Dormant LINK moves for the first time in 6 weeks: Why it matters
- Dormant LINK tokens have started to change addresses.
- As investors proceeded to “buy the dip,” the market remained consolidated
The highest count of long-held Chainlink [LINK] tokens changed hands for the first time in six weeks on 10 August, data from Santiment revealed.
? #Chainlink is firing off @santimentfeed alerts following its most dormant coin movement in 6 weeks. Dips in $LINK's mean dollar invested age curve indicate average coin times in wallets are getting younger, a scenario associated with market cap growth. https://t.co/AMcvSGnxwy pic.twitter.com/Dya5Iu9HKx
— Santiment (@santimentfeed) August 11, 2023
On the on-chain data provider, the activity of dormant coins is tracked by the Age Consumed metric. This metric measures the number of tokens changing addresses at a certain period multiplied by the time since they last moved.
Read Chainlink’s [LINK] Price Prediction 2023-24
When this metric spikes, it suggests that a large number of tokens previously left dormant have begun to change addresses, suggesting a change in the behavior of long-term investors.
This event is noteworthy because long-term asset holders rarely move their assets around. Therefore, the renewed activity of dormant coins often coincides with major shifts in market conditions and is often used to track a price bottom or top.
LINK tapped out; fastest fingers rally to buy the dip
A sharp uptick in LINK’s Age Consumed metric, followed by a decline in its price, showed that the altcoin reached a local price top of $7.62. While its value has trended downwards since 10 August, it has only dropped by 3%.
Some investors have since taken to buying the dip because of the slight drop in price. A look at LINK’s Mean Dollar Invested Age (MDIA) showed a returning flattening curve. This means that the average coin age in wallets is getting younger as newer investors buy LINK.
With newer investors accumulating the altcoin in the past few days, the bulls were spotted in control of the LINK market on a D1 chart. At press time, a look at the token’s Directional Movement Index (DMI) showed the positive Directional Index (green) at 22.94, resting above the negative Directional Index (red). This meant that buying pressure exceeded distribution.
Likewise, the alt’s Relative Strength Index (RSI) was positioned above its center line at the time of writing. At 51.90, accumulation outweighed distribution at press time.
On whether this accumulation might result in a price uptick, a look at other momentum indicators suggested that the market remains in a state of consolidation. For example, in addition to its flat price in the past few days, LINK’s Money Flow Index (MFI) inched closer to the oversold territory at 33.73.
Realistic or not, here’s LINK’s market cap in BTC’s terms
Likewise, the token’s Chaikin Money Flow returned a negative -0.02 at the time of writing, suggesting that weakness lingered in the LINK market, despite the accumulation.
These indicators suggest that the LINK market might be in a state of consolidation, and price might break in either direction in the short-term.