Key Insights
- The hype on Chainlink’s new staking feature appears to have fizzled out.
- A “buy the rumor, sell the news” scenario has played out, sinking Chainlink from $9 to the $6 zone.
- Santiment notes that this decline results from the staking hype dying out, and the supply failure on exchanges.
In December 2022, the Chainlink network underwent one of its most important changes since its launch. The oracle network graduated from being a mere semi-centralized oracle network to being a decentralized one, now called Chainlink 2.0.
The Chainlink network launched staking for a small group of people in its beta version before becoming available for everyone.
However, contrary to the explosive price gains that analysts, traders, and investors expected Chainlink to undergo, the cryptocurrency slipped from its $9 high and sank to the $6 zone despite performing extraordinarily well over the past few months.
The crypto market is starting to ask why this happened, and there may be a few answers to this question, depending on where one looks from and how one chooses to see things.
Why Did Chainlink Tumble to $6?
The Chainlink staking dashboard indicates that more than 10 million LINK tokens have already been staked, leaving only 12.5 million more LINK tokens available. This phase of early staking access is expected to end this week, and the token now has a community staker reward rate of 4.75%.
However, contrary to what was expected of these amazing new features on the LINK network, the cryptocurrency still dipped, fulfilling one of the most popular crypto market sayings, “buy the rumor, sell the news.”
According to the on-chain data aggregation platform, Santiment, the price dip on Chainlink can be attributed to
- The link staking hype and its quick death
- Half of the community pool is filled
- The Chainlink supply on exchanges failing
đź”— #Chainlink has climbed to $9.35 and fallen to $5.59 in the past month alone. The wide price ranges have been spurred on by $LINK staking v0.1 hype & now live launch, half of the community pool filling, & supply on exchanges falling. Read our deep dive! https://t.co/no3FTOxplv pic.twitter.com/NhH9fF84ni
— Santiment (@santimentfeed) December 8, 2022
Most short-term traders sold all of their holdings in LINK in the two weeks following LINK rising from the $6 zone and reaching the $9 local high. This bearish pressure caused the cryptocurrency to sink from these highs to the $6 lows it rose from in the first place.
Santiment also notes that LINK’s trading volume has significantly decreased since the beginning of November. Even yet, there was considerable excitement when fresh information about staking surfaced on 22 November, which initially caused prices to rise but subsequently fizzled out.
#Chainlink Staking v0.1 Early Access is now live on Ethereum mainnet!
The initial 25M staking pool is available for early access, so stake your LINK today to secure your spot and earn rewards for securing the Chainlink Network & larger #Web3 ecosystem👇https://t.co/Ee65mcHHPX
— Chainlink (@chainlink) December 6, 2022
As staking approached, a price/volume divergence was visible, indicating declining demand for LINK.
Chainlink (LINK) Price Analysis
The excitement over the new Chainlink staking feature also fizzled out, according to Santiment. The analysis notes that when the staking feature first launched, addresses were mostly taking full advantage of the initial staking upper limit of 7,000 LINK.
However, the stakers are now depositing smaller and smaller amounts of LINK into the pool.
Santiment adds that when Chainlink revealed its new staking information, it coincided with the local bottom ($6 zone) on the cryptocurrency’s charts and was followed by a sharp increase in supply on exchanges.
However, even with the massive supply, the price held steady.
Santiment says someone was likely using this opportunity to carefully distribute LINK since they anticipated the update would increase demand for it.
And a quick look at the transactions on the staking announcement date suggests that an address associated with the Chainlink treasury moved some LINK to Binance at the time.
Santiment adds that whale addresses have declined since 22 November, while the retail investor addresses have grown.
This means that whales have decided to split their huge stashes upon hearing that the staking limit was 7000 LINK or that the retail addresses are increasing independently.
In conclusion, Santiment adds that we have recently reached the top of the Danger Zone according to LINK’s MVRV 30.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
