Can the price of Chainlink bounce back after the recent historic bearish decline?

The price of Chainlink (LINK) has just closed another week of lackluster trading, marking a new low in two months. Alongside that, the Chainlink network has unlocked approximately 17.8 million LINK tokens – leading to a continued increase in supply.

Technically, the release of such a large number of tokens often poses a risk of price dilution. However, historical data shows a notable trend: LINK often experiences a strong rebound after large-scale unlocks. Will this familiar scenario repeat itself before the end of June?

Source: @lookonchain | XSome analysts believe that instead of being a negative signal, this unlocking event could be an opportunity, as the selling pressure seems to have been partially reflected in the price during the previous days of decline.

In fact, the prolonged decline of LINK recently indicates that the market may have "unwound" most of the negative impacts from the unlocking period.

However, the developments in the last 24 hours have raised concerns among investors: the selling pressure seems to still be smoldering, with no clear signs of a decrease.

Chainlink price cools down, approaching an important support area

As of now, LINK has decreased by 3.5% in the past 24 hours, trading around the $11.65 mark — a clear signal that investor sentiment is becoming cautious, worrying about downward pressure following the recent token unlock.

Daily LINK/USDT Chart | Source: TradingViewThis strong sell-off has caused the price of LINK to drop more than 10% from the opening level of last week and is currently approaching a crucial support area around the $10.5 mark — a region that has shown relatively strong buying power in the past. However, with new supply just pumped into the market, expectations for a quick recovery may be severely challenged unless sufficient buying power emerges to absorb this amount of tokens.

Not stopping there, the RSI indicator has not yet reached the oversold zone, indicating that the downward momentum still has room to expand. In a negative scenario, LINK could completely sweep the liquidity area around $10.5 before establishing any significant recovery signals.

Whales quietly accumulating LINK at a low price?

The decline in LINK's price, combined with the increase in supply, may have caused many retail investors to feel confused. However, in the eyes of institutions and whales, this is an ideal opportunity to accumulate at a discounted price.

According to data from IntoTheBlock, the number of large transactions has doubled just over the past weekend. Notably, the net cash flow also recorded an impressive leap – from a negative level of less than $300,000 on June 19, it reversed to over 225 million USD just one day later, shifting to a clear positive state.

Currently, whale wallets are holding about 66% of the total circulating supply of LINK. Among them, up to 78% of investors have held the token for more than a year, 20% purchased it in the last 12 months, and only a mere 3% are newcomers in the last 4 weeks.

Although the whale force is dominant, only about 35% of investors are currently in profit. This reality could serve as a catalyst to boost confidence for those seeking a safe entry point, rather than being swept up in hot price surges that often lead to profit-taking pressure.

If the whales are indeed quietly accumulating at low prices, the possibility of a significant recovery in the near future is entirely plausible. The remaining question is: Does the market have enough buying power to trigger a strong breakout?

SN_Nour