Chainlink Price May See Recovery After Recent Historically Significant Move

Chainlink price just concluded yet another week in the red and at a new 2-month low. However, the network just unlocked about 17.8 million LINK tokens, which means the supply just ticked higher.

The newly unlocked tokens should technically contribute to Chainlink price dilution in most cases. But, LINK has historically had a substantial bounce back at least in most cases after past major unlock. Could such a scenario be on the cards before the end of June?

The main reason why some analysts see the token unlock as a bullish event could be because the sell pressure was likely priced in.

The bearish trajectory that dominated Chainlink price action suggests that the potential impact of the token unlock may have already been felt.

While expectation were that the decline might already be priced in, LINK price performance in the last 24 hours indicated a different picture.

Chainlink Price Cools Down Further Leading to Key Support Zone Retest

LINK was down by over 3% in the last 24 hours at its $12.22 press time price tag. A clear sign that holder have been offloading more coins in expectations of more price dilution from the recent token unlocks.

This latest sell pressure saw price tank by over 8% from its weekly opening price. However, LINK price was rapidly approaching the $2 price zone which previously demonstrated support.

The support retest may underscore potential for a bounce back if LINK sell pressure cools down and also subject to the return of demand.

Aside from the support retest, there was another major observation that signaled an incoming pivot. LINK price has so far formed a bullish divergence pattern with its RSI.

This was because price achieved a lower low versus a higher low on the RSI. This outcome indicated potential build-up of bullish momentum.

Despite the potential bullish signs building up, it is worth noting the possibility that the recent token unlock could also dampen bullish expectations.

Meanwhile, LINK was not yet oversold hence it still had room for more downside. Price could still drop further, potentially below $11 if it fails to secure a floor within its current support range.

Whales Accumulating More Coins at Discounted Prices?

LINK’s bearish price action and rising supply may have spoofed retail. However, the performance might present ideal conditions especially for whales and institutional buyers.

Whales might already be taking advantage according to recent IntoTheBlock data. The number of large transactions reportedly doubled towards the end of the weekend.

The large transactions were also backed by a spike in netflows. The latter was in negative territory by less than $300,000 on 19 June but had surged to just over $225 million by 20 June, and that figure represented positive flows.

It is worth noting that whales accounted for about 66% of LINK coins in circulation.  In addition, 78% of the holders have held on to those coins for over a year, while 20% acquired their LINK holdings within the last 12 months.

Only 3% acquired LINK within the last 4 weeks. Despite the heavy whale involvement, only 35% of holders were in profit at the time of observation.

The low profitability may boost confidence among investors looking for a healthy entry point, as opposed to purchasing near tops where sell pressure from profit-taking is often higher.

If whales have indeed been buying more Chainlink (LINK) coins at discounted prices, then a rally could be in the pipeline. But can the cryptocurrency sum up enough bullish volumes for an explosive recovery?

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