Chainlink: Why you should consider HODLing

• LINK accumulation did not slow down and the price-DAA divergence suggested another upswing.
• Despite the price increase, an opportunity still appeared.

In the last seven days, Chainlink [LINK] has gained 18.58%, according to CoinMarketCap. However, there were signs that this hike may not mean that LINK has hit the top. And this inference was not just speculation. Rather, it is based on the actions of LINK holders and trading activity.

Read Chainlink’s [LINK] Price Prediction 2023-2024

For starters, LINK’s supply distribution among the retail cohort and whales has aligned since 10 June. Before the said date, the balance of addresses of most holders edged closer to the bottom. 

No deceleration in the upswing

However, Santiment’s data showed that the balance of addresses holding between 0 to 1 million LINK has incredibly increased. Surely, this accumulation could have played a part in the token’s price rise. 

But at the same time, the rate of accumulation was not slowing down. And in most cases, this suggests a widespread conviction that LINK could be heading for another hike.

Source: Santiment

A look at the adjusted price to Daily Active Addresses (DAA) divergence showed that while the price increased, the active addresses decreased. This is a clear indication, when referenced to history, that the Chainlink network could be gearing up for another upswing.

Source: Santiment

With respect to development activity, Chainlink has been incredibly dominant. Although this could serve as a bullish signal, the increase could also be connected to the recent cross-chain update.

In quick summary, Chainlink developed the Cross-Chain Interporeabilty Protocol (CCIP) to foster seamless communication between networks, while offering access to traditional finance projects.

Similar to the development activity, the developers’ activity contributors count has also been increasing since the first week of July. This surge means there were enough developers committed to improving the Chainlink network via public GitHub repositories.

Source: Santiment

Time to make the most of it?

At the time of writing, LINK’s volume had crossed one billion. This suggests that there were an increased number of transactions involving the token.

The volume surge also laid the grounds for another uptick since the LINK price also followed in the same direction. However, traders might need to watch for the Market Value to Realized Value (MVRV) ratio.

At press time, LINK’s 90-day MVRV ratio was 14.94%.  Usually, this metric tells whether an asset is undervalued or overpriced. While measuring unrealized profits or losses, the MVRV ratio can also be used to identify market tops and bottoms.

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So, if holders sell at the press time MVRV ratio, then profits realized would be far below double the average accumulation price.

Source: Santiment

However, LINK cannot be said to be entirely undervalued. But at the same time, the current ratio offers the opportunity to capitalize on another uptrend.