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Chainlink (LINK) has surged beyond a two-month range, driven by increased buying pressure and a bullish market structure. With the MVRV Z-Score suggesting a bottoming pattern, could LINK be primed for further gains?
MVRV Z-Score Signals Potential Bottom
The MVRV Z-Score, a metric that assesses whether an asset is overvalued or undervalued relative to its fair value, has dropped into the green zone for Chainlink. This occurred on April 8th when LINK was priced at $11.3. Since then, the token has rallied by an impressive 49.5%. Historically, a dip into the green zone has indicated market bottoms, suggesting that LINK may have more room for upside if bullish sentiment continues.
LINK’s On-Chain Structure Shows Distribution Trends
From a technical perspective, Chainlink broke past the $15.52 resistance level, which was established in February. Despite the recent breakout, the retest of the 61.8% Fibonacci retracement level at $18 failed. However, the asset’s price structure remains bullish, and the demand indicators support a potential upward move.
The Accumulation/Distribution (A/D) indicator has shown a consistent rise since April, signaling sustained market demand for LINK. This demand could propel the token higher, reversing its six-month downtrend and establishing a more favorable market structure.
Potential Challenges for LINK Amid Distribution Concerns
While LINK’s bullish structure is evident, some cautionary signs have emerged. The Mean Coin Age (MCA) metric, which tracks the average age of tokens in circulation, has shown multiple waves of heavy selling since mid-March. Additionally, the 180-day MVRV ratio remains below zero, indicating that long-term holders are still at a loss.
Despite these concerns, the Network Volume to Transactions (NVT) ratio has fallen rapidly over the past week, signaling heightened transaction activity. If LINK maintains its current momentum, it could potentially retest the $18 resistance level and aim for higher targets in the coming weeks.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: How High Could Chainlink (LINK) Go? Whale Moves Push LINK Up 125% in 24 Hours
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
