Chainlink (LINK), like most other cryptocurrencies, came under selling pressure after the FTX cryptocurrency exchange filed for Chapter 11 bankruptcy and ended up with a huge liquidity gap of over $8 billion. The risk of further decline for LINK is probably not over, and according to a recent research report by Coinbase Global, the collapse of FTX could extend the crypto bear market by several more months or perhaps through the end of 2023.
There is also other negative news currently connected with the cryptocurrency market that continues to make investors nervous. Genesis Global Capital, the crypto lending arm of Genesis Trading, had paused withdrawals over liquidity problems, while some analysts expect the FTX crisis to cause a domino effect and drag other exchanges into the mud.
Dogecoin’s Shibetoshi Nakamoto said that a potential crash of the crypto exchange Binance could severely destabilize the entire industry, but immediately after his comment, Binance confirmed that its balance sheet remains stable. The largest cryptocurrency platform Binance reported:
“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund to help projects which are otherwise strong.“
While FTX’s bankruptcy proceedings will be closely watched, the price direction of LINK, together with other cryptocurrencies, also depends on how the Federal Reserve’s interest-rate policy plays out. The softening inflation in the United States is undoubtedly positive news for cryptocurrencies, but it is still not sure if the Federal Reserve would take a less aggressive stance in its interest rate hikes. If this happens, we could see some recovery in the cryptocurrency market, but St. Louis Fed President James Bullard said on Friday that the Fed has more work to do which fueled the worries of market participants.
Technical Analysis Of Chainlink (LINK)
The price of Chainlink (LINK) has weakened from $9.50 to $5.68 since November 08, and the current price stands at $6.15. The price has also moved below the 10-day moving average, indicating that this cryptocurrency could fall even more in the upcoming days.
Chainlink (LINK) might have a hard time holding above the current support level, which stands at $5.50, and a break below this level would indicate that we could see LINK at $5 or even below. Traders should also keep in mind that LINK is correlated with the price of Bitcoin, and when the price of Bitcoin drops, that usually has a negative influence on the price of LINK alongside a majority of altcoins.
The upside potential remains limited for now; still, if the price of LINK jumps above $8, the next target could be resistance standing at $9.
Conclusion
Many cryptocurrencies, including Chainlink, remain under pressure, and according to a recent research report by Coinbase Global, the collapse of FTX could extend the crypto bear market by several more months or perhaps through the end of 2023. Chainlink might have a hard time holding above the current support level, which stands at $5.50, and a break below this level would indicate that we could see LINK at $5 or even below.
