- The Bollinger Bands indicator on Chainlink (LINK) is contracting predicting a major volatility phase could be imminent.
- High correlation with Bitcoin suggests LINK could decline further before a bullish move.
- Chainlink has witnessed a strong growth despite price drop with 22 new integrations.
Chainlink (LINK) has been a focal point for traders and analysts alike since its sudden drop at the beginning of February.
Since February 3, LINK has been oscillating between $17 and $22 with indicators signaling a possible breakout amid weeks of consolidation.
Bollinger Bands squeeze signaling a possible breakout
One of the most telling signs of an impending price shift for Chainlink has been the squeeze in its Bollinger Bands on the 12-hour chart.
The Bollinger Bands technical indicator, which measures volatility, has tightened significantly around LINK’s price, a pattern that historically precedes major market movements.
As noted by prominent analyst Ali Martinez, this squeeze could mean that LINK is on the cusp of either a sharp rally or a significant drop, depending on the market’s next move.
The Bollinger Bands are squeezing on the #Chainlink $LINK 12-hour chart, signaling that a high-volatility move could be imminent! pic.twitter.com/nP4yjvAnyK
— Ali (@ali_charts) February 17, 2025
A surge in Chainlink (LINK) trading activity
The market has also witnessed a surge in LINK trading activity, with spot inflows and outflows showing active engagement from both bullish and bearish traders.
Data from Coinglass reveals fluctuations in LINK’s net inflows and outflows, pointing to an increase in market activity.
This active trading, coupled with the Bollinger Bands squeeze, suggests that traders are positioning themselves for what they believe could be a significant market shift.
While there is a surge in market activity, on-chain metrics from Santiment indicate a 78% drop in whale transactions since November, with these large holders controlling 67% of LINK’s supply. This reduction in activity by significant players suggests a cooling off of buying pressure, which could exacerbate the downward price movement in the short term.
However, with 59% of holders still in profit, there’s underlying confidence in LINK’s fundamentals.
Chainlink’s correlation with Bitcoin
Interestingly, Chainlink maintains a 0.97 correlation with Bitcoin’s price movements, according to IntoTheBlock’s analysis.
Given Bitcoin’s current trajectory, which hints at a further correction towards the $92k support level, LINK is expected to follow suit, potentially experiencing another 30% decline before any rally towards its all-time high.
This correlation underscores the interconnectedness of the crypto market, where major assets like Bitcoin can significantly influence the performance of others like LINK.
Chainlink network growth despite price drop
Despite the price correction phase, the Chainlink network has seen substantial growth with 22 new integrations across various blockchains like Arbitrum and Base. This expansion solidifies Chainlink’s role as a leader in providing real-world asset tokenization through its reliable oracle services.
The commitment to interoperability and practical use cases through products like Data Feeds and Cross-Chain Interoperability Protocol (CCIP) suggests a robust foundation for future growth.
In addition, the re-election of Donald Trump, dubbed the first pro-crypto president, could ultimately push Chainlink (LINK) back on a bullish trend especially with its continued network expansion.
