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Is LINK’s market sentiment turning bearish? Key metrics suggest it might be!
The current market dynamics indicate a shift in investor sentiment towards Chainlink (LINK) as key indicators show a possible bearish trend. As the token failed to match its previous cycle performance, investors should not expect an upswing anytime soon.
Recent price movements have been discouraging for LINK holders, with prices falling drastically after Sunday’s announcement of the U.S strategic crypto reserve. Despite this, it was only natural that LINK would follow the overall market correction as Bitcoin (BTC) and other cryptocurrencies also fell in tandem.
A deeper dive into the on-chain data paints a more pessimistic picture for investors. Our analysis revealed that the daily chart showed a clear downtrend. Investors should not expect the token to retrace its 2020-21 run, given how the altcoin market has diluted significantly over the past four years.
To better understand investor sentiment, we looked at various metrics that track market psychology. One such metric is the Network Value to Transactions (NVT) ratio, which highlights if an asset’s market capitalization is high compared to the volume of transactions happening on its network. A lower NVT suggests a more bearish market sentiment.
Unfortunately for LINK holders, this ratio has been falling over the past couple of months. This decline mirrors a similar pattern seen in other cryptocurrencies like Bitcoin and Ethereum (ETH). The trend highlights that investors are becoming increasingly pessimistic about the asset’s future performance.
Another metric we analyzed was the MVRV (MVRV) or Market Value to Realized Volatility, which represents an investor’s average return. As things stand, the MVRV ratio sits at 0.18, a far cry from its previous peak of 0.62 in December.
This drastic drop signifies that investors are no longer holding on to unrealized profits, but instead have been forced to sell their LINK tokens due to the downward price pressure. This fear-based selling could further exacerbate the bearish sentiment surrounding the cryptocurrency.
Lastly, we considered the NUPL (NUPL) ratio, which is the ratio of relative unrealized profits to relative unrealized losses. With a current value of 0.18, it’s clear that investors are shifting from being greedy to fearful. This change in investor psychology may prompt them to reassess their positions and potentially take more aggressive action by selling off their LINK tokens.
These key metrics collectively suggest that the market is no longer in a state of euphoria, but instead is entering a phase where fear and panic dominate. Given this shift in sentiment, investors would do well to reconsider their exposure to Chainlink and reassess their positions to avoid further losses.
Source: https://ambcrypto.com/is-links-market-sentiment-turning-bearish-key-metrics-suggest-it-might-be/
