The price of LINK, the native token of the Chainlink protocol, appears to be on the path to recovery following its recent sharp decline against Bitcoin (BTC). The digital asset’s value has grown by about 10% over the past weekend, showing its first signs of recovery since the death cross was formed on the LINK/BTC trading chart. LINK’s death cross was first noticed by Josh Olszewicz, a cryptocurrency trader and technical analyst, who pointed out that it was its first occurrence since 2018.
Death cross and its implications on LINK
The death cross, is a term used in technical analysis and is used to refer to the candle chart formation that usually precedes the mass selloff of an asset. The death cross occurs at the point where a particular asset’s short term moving average falls below its long term moving average. At this point the long term moving average is on an upward trajectory while the short term average trends downwards.
The pattern usually occurs when an asset’s price is going through a steep price correction that results in a short term trend reversal. Therefore, under such circumstances, the asset outlook is quite bleak as holders look to dispose it quickly to avoid further losses in the long term.
LINK saw its value fall by about 30% within just 17 days between the last week of November and the second week in December. It is this decline that caused the death cross to appear on the LINK/BTC chart as the leading cryptocurrency held its value steadily over this period.
— Josh Olszewicz (@CarpeNoctom) December 10, 2020
Chainlink showing resilience with trend reversal
The death cross does not seem to have shaken LINK holders with the virtual asset soon bouncing back with a relief rally. The protocol’s fundamentals still remain strong and as such, the price plunge did not cause a great deal of panic amongst the investors. Their resilience has been the foundation upon which the relief rally is built and appears likely to keep the asset’s value steady in the near term.
LINK made a major pullback on Dec. 13, rising by 10.5% within just 12 hours as the market remains buoyed by the sustained growth in the DeFi sector. The cryptocurrency’s value has been consolidating over the past few days culminating in the rapid price surge on Sunday. Now, it appears poised for another upward rally once it establishes some solid support levels that it can rely on to build forward momentum.