Chainlink Price Prediction: LINK market dominance takes a hit but is there a Hail Mary?

Chainlink has, in less than two days, lost ground to three cryptocurrencies (Polkadot, Bitcoin Cash, and Binance Coin) as far as market capitalization is concerned. Prior, LINK rallied in tandem with the decentralized finance (DeFi) craze to the extent of attaining the top five status after displacing Bitcoin Cash. The surging market cap happened as the prices soared to new all-time highs at $20.

Top ten cryptocurrencies by market capitalization 

Unfortunately, September has not been kind to the smart contracts oracle token. In addition to the price dropping below $10, LINK has also witnessed an alarming market dominance decrease. From the fifth-largest digital asset in the market, Chainlink is barely holding the eighth position with a market cap of $3.8 billion. So, the question is, why is LINK spiraling? Is there hope for reversal both for the price (currently trading at $10.97) and market capitalization?

Crypto.com adopts Chainlink’s oracles for DeFi wallet

Despite Chainlink’s challenges to sustain the uptrend and market dominance, the protocol is still the most preferred provider of decentralized price oracles. Crypto.com is the latest DeFi project to tap into the live price feed oracles from Chainlink. The integration comes after the Hong Kong-based crypto exchange announced the launch of its DeFiSwap – a Uniswap as well as an automated market maker. Additionally, Crypto.com will tap into Chainlink’s famed price feeds for its native digital currency, CRO.

Chainlink awaits possible bull flag pattern breakout

Generally, LINK is bearish, especially when short timeframes are taken into account. The Relative Strength Index (RSI) has slipped below the midline and seems to be nurturing a leveling motion at 40. If the RSI trend remains sideways, we can expect Chainlink to commence a period of consolidation ahead of a reversal.

The price has also been trading within a descending channel since the rejection at 20. Although this channel highlights a continuing bearish trend, it can also be interpreted as a bull flag pattern. Flag patterns are used in technical analysis to signal the continuation of the trend preceding them. In this case, the bull flag illustrates that LINK could soon resume the uptrend for highs towards $20. Moreover, the wide gap left by the 50 SMA above the 200 SMA in the daily range hints buying pressure is still present, and perhaps if bulls increase their positions, they could once again regain control of the price.

LINK/USD daily chart

Chainlink on-chain analysis

According to IntoTheBlock’s IOMAP, LINK is heading into a region of increasing seller congestion. The first two resistances at $10.78 - $11.08 and $11.08 - $11.41 could easily give way due to the low volume of coins previously purchased. Unfortunately, the region between $11.41 and $12.38 has the highest congestion of selling pressure, likely continue to delaying Chainlink’s recovery mission.

Chainlink IOMAP chart

In other words, the path of least resistance seems downwards, especially if the first support at $10.43 - $10.76 gives up. Previously, 462 addresses bought 2.24 million LINK. If this support is broken, LINK/USD could end up in a devastating slide to $9.46 to $9.78, a range where 3,660 addresses bought 1.12 million LINK.

Consequently, on-chain metrics provided by Santiment show that whales have begun accumulating the cryptoasset. For instance, addresses holding between 10,000 and 100,000 LINK have increased from 2,709 on September 9 to 2,739 on September 15. Similarly, the addresses containing between 1 million and 10 million LINK remained unchanged in the same period.

Chainlink holder distribution

Looking at the other side of the picture

According to the above analysis, LINK is mainly in a bearish trend unless the bull flag pattern discussed comes into play. The only Hail Mary appears to be that some whales choose to increase their holdings amid the falling price. Eventually, the volume of created would sway the price upwards. Moreover, as LINK enters into consolidation, there is a likelihood the impending breakout is bullish, particularly if some of the resistance zones highlighted by IntoTheBlock IOMAP are flipped into support.