Chainlink (LINK) is showing signs of a potential bullish breakout as supply dynamics tighten and market profitability surges. With nearly 90% of LINK’s circulating supply sitting in profit and exchange reserves at multi-year lows, analysts are pointing to a possible supply-driven rally.
LINK supply nears peak profitability
According to Glassnode data, 87.5% of Chainlink’s circulating supply is currently in profit. This marks a significant increase in profitability since early July, coinciding with LINK’s price rally from under $15 to above $25.
Most holders remain in a comfortable position, with reduced incentives to sell at current levels. If fresh demand accelerates, the limited sell-side pressure could amplify upside momentum, setting the stage for a potential breakout.
Exchange reserves decline to a multi-year low
Data from CryptoQuant shows Chainlink’s exchange reserves have dropped to 161.5 million LINK, the lowest in several years. This steady downtrend, which began in mid-2023, reflects the declining availability of tokens for immediate sale.
Historically, falling exchange reserves have signaled bullish setups, as reduced liquidity on exchanges often drives stronger price movements when buying pressure increases.
Short-term cooling, long-term setup intact
At press time, Chainlink was trading at $23.58, consolidating after a strong rally earlier this month. The daily chart showed LINK slipping below the 9-day and 21-day simple moving averages, reflecting short-term weakness. The RSI stood at 52.35, suggesting a neutral momentum zone, while the MACD crossed into bearish territory.
Despite this cooling phase, LINK has held above the $23 level, highlighting resilience. With exchange reserves shrinking and most holders in profit, analysts suggest that renewed buying momentum could accelerate Chainlink’s path toward higher valuations.
Market Outlook
The combination of low exchange reserves, high profitability among holders, and potential demand inflows presents a bullish case for Chainlink. While short-term technical indicators suggest caution, the underlying supply crunch could fuel a sharp upside move in the weeks ahead.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are volatile and risky. Always conduct your research before making any investment decisions.
