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There may be hope for Chainlink going into 2022, despite drawdown

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Chainlink, being a unique blockchain in the crypto space, witnesses significantly higher adoption in comparison to other chains. Unfortunately, its price action isnโ€™t performing as well and its effect on investors is becoming apparent.

Chainlink on a downtrend

Far from an all-time high, Chainlink over the course of the last 2 months has instead made a local low of $17.7. The recovery rally of 22% on December 21, was pretty much invalidated. This was thanks to the market dip 2 days ago, where LINK lost 14% in 2 days.

At least until 2 months ago, it was still testing the critical support of $35. This level is not only fundamentally the determiner of a rally, but also a psychological level. Until this is flipped into support, a new ATH is out of the question.

Chainlink price action | Source: TradingView – AMBCrypto

Although at the moment, even a test of $35 appears to be difficult this year. This is why investorsโ€™ confidence and optimism seem to be waning.

The dip of Dec 28 led the investors to react in the most negative way in almost 2 months. They were still somewhat optimistic when LINK was around $25 despite suffering losses network-wide.

Chainlink sentiment | Source: Santiment – AMBCrypto

As a result, these investors have decided to resort to HODLing until they can see an appropriate exit point. The falling velocity is a testament to this.

And even though losses are down by 6%, there are about 50% of investors, who have been pushed into suffering as the month began. Out of this 50%, there are 16.6k addresses in particular who are at their worst in the last 6 months, as they bought when LINK was around its ATH price of $52.3.

Chainlink investors in losses | Source: Intotheblock – AMBCrypto

But the good thing is that Chainlink has domination over HODLers. Those who bought the alt anytime between 1 month and beyond a year, represent 95% of all supply, which is higher than most altcoins.

Chainlink investor distribution | Source: Intotheblock – AMBCrypto

Thus as long as LINK has the support of such investors there is a fair chance that before the end of January 2022, not only will Chainlink reclaim $25 (ref. Chainlink price action image), but it could also reach closer to flipping $35 into support.

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Aaryamann is a freelance crypto journalist working with AMBCrypto. He is currently investing his time in the crypto-space. He has a keen interest in DeFi, the ever-expanding possibilities of blockchain technology, as well as the political impact they would have.
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