Chainlink price forms alarming pattern as exchange reserves dip ahead of ETF launch

Chainlink price dropped for three consecutive days and remains in a deep bear market despite important catalysts like the upcoming LINK ETF approval and falling exchange reserves.

Chainlink (LINK) token dropped to $13, down by ~53% from its highest level in September, a move that has erased billions of dollars in value. 

LINK price has crashed despite notable bullish catalysts. One of them is that Grayscale will launch its LINK ETF next week. As one of the top utility tokens in the crypto industry, this ETF will likely lead to substantial demand from investors. 

Some top utility tokens have had robust demand. For example, spot Solana (SOL) ETFs have had over $618 million in inflows and are now nearing the $1 billion mark in terms of assets. 

Similarly, spot XRP ETFs have added over $666 million in inflows, a sign that the demand is accelerating. All XRP ETFs now have $687 million in assets, a trend that may accelerate in the near term. 

The other notable catalyst for Chainlink price is that its supply in exchanges has continued falling. Nansen data shows that this supply has been in a freefall and now stands at 214 million, down sharply from 275 million. 

Falling LINK reserves is a sign that demand is rising, with more investors moving their tokens to exchanges. One minor reason why this is happening is that Chainlink has continued to add more tokens to its strategic reserves. These reserves are nearing 1 million, a few months after they were launched.

Chainlink price technical analysis

The weekly chart shows that Chainlink price has formed an alarming pattern and is now sitting at an important support. It has formed a head-and-shoulders pattern, a common bearish reversal sign.

LINK price has moved to the neckline of this pattern. It has moved below the 100-week Exponential Moving Average and the Supertrend indicator. 

Therefore, the most likely Chainlink forecast is bearish, with the next target to watch being at $10, down by 22% from the current level. A move below that level will point to more downside, potentially to the 2023 low of $8.