As the overall market rally is slowly starting, altcoins like Chainlink are also looking at some sort of profit. But as attractive returns attract new investors, a number of other factors also hint at a future where they may not reap as high returns as they might expect.
Chainlink on thin tape?
For any asset, its backbone is always something related to the growth of the network. And Chainlink is leading on that front. Over the past few days, Chainlink products have spread throughout the crypto space as they are deployed by DApps on every chain other than Ethereum and BSC. The newest in the mix are Avalanche, Fantom, and Polygon.
While the network continues to grow, its investors are also benefiting from increased adoption due to the recent price rally.
About 10 days ago LINK broke its downtrend again but this time hopefully it will be good. As the price action is testing the key resistance at $25.2 today, Chainlink has a chance to recover before the downside power seems to be waning according to ADX.
Chain Link Price Action | Source: TradingView – AMBCrypto
The recovery that helped LINK break the downtrend also helped nearly 30% of Chainlink investors recover from the losses of November and December.
The fact that the network actually realizes a profit for the first time in more than 2 months could really attract a flood of new investors into the asset.
Chainlink network realizes profits after 2 months | Source: Santiment – AMBCrypto
Plus the lack of speed on the network is a sign that investors are now focusing on HODLing instead of cashing out for profit. So new investors may have similar intentions.
Chain link velocity | Source: Santiment – AMBCrypto
Going forward, the sole cause of concern will be the asset’s correlation with Bitcoin, which is currently negative 0.68. This would have been a profitable scenario a month ago. But for now, the king coin is on the verge of a potential recovery. Sharing a negative correlation at such a time would result in LINK losing instead of gaining.
Correlation of Chain Links with Bitcoin | Source: Intotheblock – AMBCrypto
So in the future, this will be an important indicator to understand the probability of loss when investing in LINK.