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  • On-chain metrics turn bearish, suggesting that an upswing to a new record high will be an uphill task.
  • LINK’s technical outlook remains bullish despite the on-chain bearish picture.
  • Chainlink whales have not slowed down on the uptake of the token, adding to the buying pressure.
  • If the price fails to hold above $24 and the 50 SMA, a breakdown to $20 may come into play.

Chainlink has more than surpassed the investors’ expectations in 2021. After trading a new all-time high as seen on Tuesday, LINK confirmed support at $20.

Meanwhile, the smart contract live price feed oracle token is trading at $23.9 even as the bulls fight for another break. However, a comprehensive look at on-chain metrics shows that Chainlink may breakdown first before it resumes the uptrend to new all-time highs.

On-chain metrics brew Chainlink’s breakdown

According to Santiment’s data, Chainlink’s social media mentions have been dropping consistently. The social volume model tracks the number of related social media mentions on hundreds of channels, including Twitter, Telegram, and Reddit. Rising social media mentions highlighting a possible upswing in the price. However, a drop such as the one seen with Chainlink is a bearish signal.

Chainlink social volume chart

Chainlink social volume chart

Similarly, Chainlink is experiencing a significant drop in the number of transactions on the protocol. Santiment’s transaction volume model illustrates the aggregate number of LINK tokens transacting on the network each day.

On January 4, the transaction volume hit roughly 10.4 million LINK. However, as the price consolidated, the volume plunged to approximately 709,000 LINK. This drop shows that fewer tokens are exchanging hands, explaining the reduction in the on-chain volume.

Chainlink transaction volume

Chainlink transaction volume

The MVRV, which shows the network’s “average profit or loss of all LINK holders based on the price when each token last moved,” is at an extreme high, suggesting that investors would be willing to sell. A low MVRV is always a bullish sign because no holder is in profit and therefore needs to hold. On the other hand, a high MVRV insinuates a possible increase in selling pressure.

Chainlink transaction volume

Chainlink MVRV chart

Consequently, daily active addresses on Chainlink’s network have plunged substantially in the last seven days. The on-chain metrics highlight the number of addresses that are actively transacting on the network every day.

It also gives a comprehensive look at the level of speculation. As observed on the chart, a decrease is usually a bearish signal, likely to add credibility to the downtrend.

Chainlink daily active addresses

Chainlink daily active addresses

Looking at the other side of the fence

Chainlink’s technical outlook remains bullish despite the worsening on-chain metrics. The price has just broken above the stubborn resistance at $24, proposing a possible run-up to the record high at $25.8. The 50 Simple Moving Average added credibility to the ongoing trend by holding firmly as support.

If LINK closes the day above the short-term anchor at $24, we will likely see an upsurge in buy orders. Trading beyond the current record high may boost Chainlink toward $30. The Relative Strength Index reinforces the ongoing bullish momentum as it nears the overbought area.

Chainlink 4-hour chart

Chainlink 4-hour chart

As reported on Tuesday, Chainlink whales are still accumulating, ignoring the MVRV ratio, which suggests that most holders are in profit. In other words, investor sentiment remains high for LINK, hence the ambitious outlook toward $30. As long as the holder distribution continues to grow, buying pressure will stay intact or increase, thereby supporting the bullish outlook.

Chainlink holder distribution

Chainlink holder distribution

It is worth noting that a correction will come into play if LINK fails to hold above $24. Although another support is anticipated at the 50 SMA, an increase in selling orders could trigger a breakdown to $20 (former support) before Chainlink resumes the uptrend.