LINK Supply Shrinks on Exchanges—Is Chainlink’s Comeback Near?

• Alongside the negative netflows, Chainlink’s Weighted Sentiment metric has seen a sharp decline, indicating an increase in negative sentiment around the token.
• This might lead to a bullish reversal with the LINK price rebounding to around $11.80, reflecting a 3.69% increase in the last 24 hours.

Chainlink’s (LINK) on-chain data is displaying trends that could indicate bullish potential for the RWA token. Recently, the LINK token has seen a continuous period of negative exchange netflows. Popular market analysts interpret this as a sign of accumulation, hinting at a LINK price surge.

A Look At Chainlink’s Exchange Netflows

For nearly a month, Chainlink’s exchange netflows have remained in the negative, according to the market analysis firm, IntoTheBlock. This netflow metric gauges the movement of LINK tokens into or out of centralized exchanges (CEXs), reflecting whether more coins are entering or exiting these platforms.

A positive netflow would signify a net influx of LINK tokens into exchanges. This suggests that holders might be preparing to sell, which generally signals a bearish trend. On the other hand, when netflows remain negative, it implies that LINK holders are withdrawing tokens from exchanges to private wallets. It indicates a potential long-term accumulation and hold strategy, per the CNF report.

Hence, the recent withdrawals could reflect a reduction in immediate sell pressure, a factor commonly seen as bullish. IntoTheBlock commented on this trend, “This trend often signals accumulation, as holders move assets to cold storage or private wallets, reducing immediate sell pressure.”

The data also revealed that Chainlink has observed negative netflows for several consecutive weeks. This shows the consistency in the number of LINK holders who have shifted their assets off exchanges. With continued withdrawals, LINK’s circulating supply on exchanges is likely reduced. This potentially lowers the likelihood of heavy sell-offs and may eventually even lead to a Chainlink price rally.

Other Factors Supporting LINK Price

In addition to these netflows, another metric indicates a possible bullish sentiment shift for LINK, reported CNF. According to an X post by the on-chain analytics firm Santiment, Chainlink’s Weighted Sentiment metric has experienced a sharp change recently, signaling a notable shift in social media discussions around the token.

This metric works on machine learning tracks positive and negative mentions across major social platforms and adjusts based on the volume of LINK discussions per day. The latest data points to a steep 372% plunge in Weighted Sentiment. This indicates a significant increase in negative sentiment also known as FUD (fear, uncertainty, and doubt) following recent bearish price action.

According to historical trends, sharp increases in negative sentiment often correlate with a bullish reversal in the crypto market. This trend stems from the tendency of assets to move counter to overwhelming sentiment. This means that if the current level of FUD around Chianlink persists, it may encourage a reversal in LINK price.

Moreover, the LINK price has already started rebounding. As of this report, the Chainlink price is trading around $11.80, marking a 3.69% surge in the last 24 hours. Furthermore, the 24-hour trading volume of LINK reached $250.45 million, suggesting a 3.24% increase. Also, the Chainlink open interest has soared by 17.35% to $244.42 million, which is another bullish indicator.