Ethereum (ETH) and ChainLink (LINK) turned into the biggest losers in 2024

Ethereum (ETH) and ChainLink (LINK) lined up among the assets with the lowest monthly and 12-month returns. Despite bullish expectations and utility, ETH and LINK turned into the worst assets based on returns. 

Ethereum (ETH) and ChainLink (LINK) saw the most pain in the past month, sinking to the lowest returns among a portfolio of assets. ETH and LINK were among the most high-profile assets based on adoption and utility. However, active trading and market headwinds turned the two tokens into one of the least successful bets in 2024. 

Based on Santiment data, ETH and LINK showed the most significant indication of ‘blood in the streets’, suggesting that some returns may come from the bounce. But ETH and LINK have not performed the outsized rallies that were oftentimes predicted.

The losses continued on a single dramatic day of selling, where both ETH and LINK wiped out more than 20% of their value overnight. Even during bull times, however, ETH and LINK showed signs of being underbought. 

📊 Chainlink and Ethereum are seeing their combined lowest levels of 30-day (short term) and 365-day (long term) average trading returns Sunday. Historically, the more 'blood in the street' there is from other traders, the more justification there is to buy into others' pain. pic.twitter.com/tuPHUpKVsd

— Santiment (@santimentfeed) August 4, 2024

LINK returns to pre-rally range

LINK returned to $9.03, though still not erasing all gains for the past 12 months. LINK still trades above its lows of $5.87 at the tail end of the bear market. But the turbulent days may continue to pressure the price. LINK has now sunk to its two-year range, similar to other altcoins that erased any bullish gains from 2024.

In the case of LINK, another pullback is expected toward the $7-8 range. LINK has behaved in a similar way during previous market cycles, with short rallies and significant pullbacks. 

LINK is responsible for securing the value locked on the Aave protocol, but the token price could not rally above the $18 range. Expectations for 2024 were for LINK to return to $35 and eventually make a new record. Currently, LINK secures more than $18B in value locked, with a 14% slide in the past day due to overall market conditions. 

The supply of LINK also faces potential inflation, based on ad-hoc token unlocks. More than 44% of the total supply is held in a conditional team wallet, to be unlocked for treasury reserves. Those tokens have no vesting schedule and no set date for being released. 

ETH sees spot buying at the bottom of the range

ETH prices entered last week with relatively low open interest compared to Bitcoin (BTC). Yet ETH is a highly traded token, and the past 24 hours erased its value, generating bigger losses even than volatile meme tokens.

Smart money started selling ETH even before the deeper market crash. After ETH unraveled to the $2,200 range, hacker wallets even used the event to take a position. The Nomad bridge exploiter bought 16,892 ETH, soon after making the tokens untraceable through Tornado Cash.

Spot buying returned from smart money wallets. A buyer is using stablecoins from lending protocols, which are functioning despite the market crash.

ETH prices are now in the hands of spot buyers after unraveling most derivative positions. ETH open interest liquidated more than $4B in total since the launch of ETF trading. At the same time, Grayscale shed more than 100K ETH, shrinking its position from 2.5M ETH down to 2.39M tokens. Grayscale remains the only ETF that is actively selling off its position, while other funds reported inflows even during the weekend.

ETH also fell faster than BTC, shrinking its market dominance to 15.1% from the usual levels around 17%. ETH continued to slide even under $2,200 in the new week, pressured by negative news on the stock market. The trigger for the current slide in stock and crypto markets arrived after the Bank of Japan raised interest rates by 0.25 points, causing the unraveling of the basis trade, which affected stock markets across the globe. 

The crypto market liquidated more than $1B in the past 24 hours, following the previous three days of liquidations. The current crypto crash caused the biggest liquidation event since the April market correction, predominantly attacking long positions. 

---

Cryptopolitan reporting by Hristina Vasileva