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Projecting the price impact of LINK after unlocking 21 million tokens
- Project sent 18.25 million tokens of the 21 million unlocked to an exchange
- LINK price could drop to $12.95 with resistance appearing at $13.90
Chain shirt [LINK], the decentralized oracle network, has released 21 million tokens from its non-circulating supply. At the time of release, the tokens were worth $295 million.
Chainlink’s circulating supply has been capped at 1 billion tokens. Therefore, the release of new tokens could put pressure on the price.
Historically, when a new set of tokens is unlocked, the asset in question may be exposed to high volatility. In most cases, the value drops soon after. In this case, according to Spot On Chain, Chainlink sent 18.25 million tokens to Binance after the operation to unlock.
Is increased supply good news?
Sending to an exchange implies that the project is ready for sale. However, it also transferred 2.25. million, worth $31.30 million, on its multi-sig portfolio.
A multi-sig wallet is a shortened form for a multi-signature wallet. It is a wallet that uses private keys to access cryptocurrencies and requires more than one person to transfer assets.
The transfer to the wallet suggested that Chainlink might don’t sell tokens there shortly.
Source: Spot on the chain
At the time of writing, LINK was worth $13.72, down 3.58% over the past 24 hours. This drop could be a consequence of the exchange rate shift mentioned above.
So the question is: will the price of LINK continue to fall? Let’s look at it from an on-chain perspective. AMCrypto analyzed this potential by looking at speed.
LINK is preparing to slip below $13
Velocity measures the speed at which tokens circulate on a network. If the parameter is at a low level, it means that tokens are being held, rather than circulated.
Therefore, this can make the price stable or lead to an increase in price. However, according to Glassnode, LINK’s the speed increased from June 20th. This means that its increased frequency of transactions could soon trigger volatility.
If the reading continues to rise, the price of LINK could rise wanted. Therefore, a drop below $13 may also be possible.
Source: Glassnode
Further trial of the potential decline was revealed by IOMAP. Here, this acronym stands for In/Out of Money At Price.
With the metric, Chainlink traders can spot potential support and resistance levels. The larger the address group at one point, the better support or resistance it can provide.
According to IntoTheBlock, 12,090 addresses purchased 5.84 million LINKS at an average price of $13.40. It is important to underline this here this group is in profit.
However, the other set of 14,140 addresses purchased 11.62 million tokens at $13.90. This cohort is at a loss. Simply put, the higher number of addresses suggests that LINK may not be able to reach $14.
Source: IntoTheBlock
Light Chain shirt [LINK] Price forecast 2024-2025
This is because some of the losing holders may decide to break even if LINK reaches $13.90. If this were the case, the price of the cryptocurrency could drop to $12.95 in the short term.