bullish

Value

Optimism

Chainlink

<ul>
 <li>LINK’s price faces potential drawdown as investor optimism wanes.</li>
 <li>NVT ratio at 4-year, 8-month high, suggesting overvaluation relative to network activity.</li>
 <li>Price could drop to $10.79 support, with $10.00 as worst-case scenario; $13.00 breach would invalidate bearish outlook.</li>
</ul>
<a href="https://thenewscrypto.com/?s=Chainlink" target="_blank" rel="noopener noreferrer nofollow">Chainlink</a> (LINK) has buoyed its price in recent weeks begins to lift. This shift in investor sentiment, coupled with concerns about the network’s valuation relative to its activity, could potentially trigger a price drawdown.
Since late July, <a href="https://thenewscrypto.com/?s=LINK" target="_blank" rel="noopener noreferrer nofollow">LINK </a>holders have maintained a bullish stance, buffering the cryptocurrency against substantial losses and even driving its price upwards in mid-August.
However, recent data suggests this strong optimism is beginning to erode. Despite recent price increases, the weighted sentiment for LINK has been on a consistent downward trajectory, though it currently remains above the neutral zero line.
<figure class="wp-block-image size-large"><img decoding="async" width="1024" height="347" src="https://thenewscrypto.com/wp-content/uploads/2024/08/image-100-1024x347.png" alt="" class="wp-image-106633" srcset="https://thenewscrypto.com/wp-content/uploads/2024/08/image-100-1024x347.png 1024w, https://thenewscrypto.com/wp-content/uploads/2024/08/image-100-300x102.png 300w, https://thenewscrypto.com/wp-content/uploads/2024/08/image-100-768x260.png 768w, https://thenewscrypto.com/wp-content/uploads/2024/08/image-100.png 1536w" sizes="(max-width: 1024px) 100vw, 1024px">
 <figcaption class="wp-element-caption">
 Source:&nbsp;<a href="https://app.santiment.net/" target="_blank" rel="noopener noreferrer nofollow">Santiment</a>
 </figcaption>
</figure>
<h2 class="wp-block-heading" id="h-chainlink-metrics-show-overvalued-status">Chainlink metrics show overvalued status</h2>
A key metric raising red flags is the Network Value to Transactions (NVT) ratio, which has soared to levels not seen since January 2020 – a four-year and eight-month high.
This elevated NVT ratio suggests that LINK’s current valuation may have outpaced its underlying network activity, potentially indicating an overvalued asset. Such a disconnect between price and fundamentals often precedes market corrections as investors reassess their positions.
From a technical perspective, LINK’s price action revolves around the critical $12.35 level. Currently trading at $11.6, Chainlink is attempting to flip this resistance into support. The $12.35 mark has served as a major bounce-back point in recent trading, making a breakthrough crucial for sustaining LINK’s upward momentum.
However, the confluence of waning sentiment and valuation concerns paints a potentially bearish picture. Should these factors continue to weigh on investor confidence, LINK could experience a retracement to the local support floor at $10.79.
While a drop below this level seems unlikely based on current data, adverse market conditions could potentially push the price towards the psychologically significant $10.00 mark.

Chainlink (LINK) Faces Potential Drawdown as Investor Optimism Wanes

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TheNewsCrypto

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