Key takeaways
As LINK holders enjoy high profitability and fewer tokens remain on exchanges, conditions are aligning for a potential price squeeze.
Chainlink [LINK] is getting ready for a major move.
With nearly 90% of its circulating supply sitting in profit and exchange reserves falling to multi-year lows, we’re all set for a potential supply crunch.
If fresh demand enters the market, dwindling sell-side pressure could quickly tip the balance in LINK’s favor.
LINK supply nears peak profitability
At press time, 87.5% of Chainlink’s circulating supply was in profit, according to Glassnode data.
The chart shows a sharp climb in profitability since early July, closely tracking LINK’s rally from under $15 to above $25.
Most holders are sitting comfortably, with reduced incentive to sell at current levels.
If fresh demand accelerates, limited sell-side pressure could cause stronger upside momentum, putting LINK in the position for a breakout.
Exchange reserves hit multi-year low
Chainlink’s exchange reserves have fallen to 161.5 million LINK, a multi-year low according to CryptoQuant.
There’s been a steady downtrend in reserves since mid-2023, even as LINK’s price climbed toward $23.7. This sharp decline indicates fewer tokens available for immediate sale, reducing sell-side pressure on the market.
Falling exchange reserves have often coincided with bullish setups, as limited supply on exchanges can amplify price moves when demand rises.
If buying momentum picks up, LINK’s constrained liquidity could accelerate the path to higher valuations.
LINK consolidated as momentum cooled
At press time, LINK traded at $23.58, consolidating after a strong rally earlier in August.
The daily chart revealed that price had slipped below both the 9 and 21-day SMAs, showing short-term weakness. The RSI stood at 52.35, so neither buyers nor sellers were in firm control.
Meanwhile, the MACD had crossed into bearish territory, indicating fading momentum.
Despite this cooling, LINK has maintained resilience above the $23 mark. With exchange reserves at multi-year lows, the setup remains favorable if demand returns.