On-chain data shows a significant drop in Chainlink exchange supply, which could be positive for the asset’s price.
Exchange Chainlink supply has seen a recent drop
According to the data of the analysis company on the chain saint, the exchange’s LINK supply may currently be forming a bullish divergence. “Exchange supply” here refers to the percentage of Chainlink’s total circulating supply currently stored in all centralized exchange wallets.
When the value of this indicator rises, it means that investors are currently depositing a net amount of tokens into these platforms. Since one of the main reasons they move tokens to exchanges is for sale-related purposes, this trend could have a bearish impact on cryptocurrencies.
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Conversely, a decrease in the value of the indicator (i.e. withdrawals occur) can be positive for the price, as it can be a sign that holders are accumulating.
Now, the chart below shows the trend of Chainlink supply on exchanges over the past few years:
The value of the metric seems to have observed some decline in recent days | Source: Santiment on X
As can be seen from the graph, the Chainlink supply on exchanges has declined recently, implying that a net amount of tokens has left these central entities.
In the chart, Santiment also highlights the pattern that cryptocurrency prices have followed over the past few years when exchange supply has formed similar trends.
It appears that whenever the supply on exchanges drops into the green zone as the price drops, Chainlink soon observes some uptrends.
With the current value around 15.5%, the indicator is within that green zone, so LINK could benefit from a bounce from the current bullish divergence.
However, not all signs are in Chainlink’s favor, as X analyst Ali noted in a report. postal The behavior of the whales is different from the adjustment in June.
The data of the different whale-related metrics | Source: @ali_charts on X
The “whale volume,” which tells us the number of transfers these mega-investors are making, has declined since the most recent asset draw, suggesting that this group has ceased activity.
This is a departure from the trend following the price drop in June, when these investors stepped up transfer activity. The total open interest of whales also rose at the time, as these investors participated in the accumulation, helping to form the bottom and provide the platform for the eventual rally.
This time Chainlink whales continue to have flat open interest, which means they are not interested in buying the dip. So while a drop in exchange supply is certainly bullish, support from whales may also need to emerge if the asset has to turn around.
Chainlink has been trading sideways since its crash earlier this month, with its price continuing to fluctuate around $6.
LINK continues to show stale price action | Source: LINKUSD on TradingView
Featured images from iStock.com, charts from TradingView.com, Santiment.net