Chainlink (LINK) is currently revisiting a vital support level as the market experiences a downturn, prompting analysts to warn of a possible further decline if the price does not stabilize.
Chainlink Falls Below $25 Threshold
On Monday, Chainlink mirrored the broader market’s trajectory, declining 10% to reach local lows. The cryptocurrency had recently peaked at $27.87 on Friday but struggled to maintain that level, retracting to the $25.5-$26.5 range over the weekend.
LINK lost its previously regained support at the $25 mark, dropping to approximately $23.5 by afternoon trading. According to AltCryptoTalk, LINK has been trading within an ascending channel for the last two weeks, indicating that it remains within a critical support area despite falling below $25.
Market observers believe that if LINK can stay above the lower boundary of the support zone at $23.5, “the overall sentiment remains positive, and we will look for trend-following long setups during any bearish corrections.”
An analyst pointed out that the Chainlink network is characterized by its “security, efficiency, and decentralization,” which bolsters the potential for its native token’s growth.
Importantly, SBI Group, one of Japan’s foremost financial entities with $200 billion in managed assets, has teamed up with Chainlink to “enable various innovative applications focused on tokenized funds, real-world assets such as real estate and bonds, regulated stablecoins, and more.”
In a recent announcement, both companies disclosed plans to utilize Chainlink’s services, which include the Cross-Chain Interoperability Protocol (CCIP), SmartData (NAV), and Proof of Reserve, to enhance liquidity in secondary markets and improve the operational efficiency of tokenized assets while adhering to privacy and compliance standards.
Could a Drop to $20 Be Inevitable?
Analyst Ali Martinez has indicated that Chainlink may need to test a significant support level before any substantial upward movement occurs. He highlighted a four-year symmetrical triangle formation on LINK’s chart, which could signify a potential 280% rise following a breakout.
LINK has revisited the upper boundary of this pattern twice since the Q4 2024 rally, briefly surpassing crucial resistance last week. However, as it failed to validate that breakout, the analyst suggests that another dip may occur before aiming for the $95-$100 range.
According to the chart analysis, this potential dip could target the next significant support level near $20, marking a 15% decrease from current prices. Previously, analyst Rekt Capital emphasized the importance of maintaining stability around the $23.86 mark, asserting that a monthly close above this level is critical for LINK’s upward trajectory.
Should LINK fail to reclaim this price point on a monthly basis, it could face a deeper retracement towards the $19.41 level, a point not seen since the breakout in early August.
Meanwhile, Alex Clay has expressed that Chainlink could become the next Ethereum, noting several similarities between their respective charts. According to him, both cryptocurrencies have shown accumulation within a multi-year triangle formation, and LINK may follow in Ethereum’s footsteps once it effectively reclaims the resistance level.
Notably, after breaking out of a similar pattern last month, ETH confirmed its resistance as support and reached a new all-time high the following week.
As of this update, LINK is priced at $23.52, reflecting an 8.5% decline over the past week.
