On-chain analysis of LINK shows that the price movement is strongly correlated with the development activity of the project. Could the recent boom in DeFi trigger a LINK price rally in the coming weeks?
LINK has suffered some positive effects as investors turn to decentralized finance protocols amid the turmoil of the US banking sector.
Increased development activity on the Chainlink network
Chainlink (LINK) is a blockchain-based decentralized oracle network (DON) that provides real-world data for DeFi protocols built on smart contracts. One of the factors driving LINK's recent bull run was a spike in demand for DeFi products following the massive collapse in the banking sector.
As more investors move to decentralized financial products and services, DeFi protocols will require backend services provided by Chainlink. The recent increase in Chainlink development to serve the growing demand from various DeFi smart contract platforms has highlighted this.
According to on-chain data from Santiment, developer activity on the Chainlink network has increased by more than 50% since the beginning of February. As described below, Chainlink developer activity score has increased from 164.90 to 251 .80 between February 2 and March 28.
Development activity shows how many resources are being spent on sanitize the network. This may include adding new features, expanding the network's capabilities, or implementing bug fixes.
A sustained increase, as observed above, poses a bullish signal. Investors may flock to LINK, in the hope that the price increase due to increased development activity will positively impact the coin's long-term price performance. Notably, previous LINK price rallies have often preceded a spike in development activity. If this condition holds, LINK holders can expect a bull run in the coming weeks.
LINK holders are moving tokens off the exchange
On-chain LINK analysis shows that another key signal supporting the bullish stance is the decrease in the supply of LINK on exchanges . Supply on Exchanges metric tracks the flow of tokens into exchanges after deducting the outflow. According to Santiment, the number of LINKs on exchanges has been decreasing continuously since the beginning of March.
As the red line in the chart below depicts, the supply of LINK on exchanges has decreased from 169.3 million tokens to 158.7 million tokens on March 28.
When the supply on exchanges decreases for a long time, it reduces the number of tokens available for short-term transactions. This scarcity is caused by holders moving tokens away from exchanges, which can increase the price of LINK.
Ultimately, if Chainlink developers continue to build at the current rate and holders continue to move tokens away from exchanges, crypto investors can expect a LINK rally. lengthen.
LINK Price Prediction: Is 9 USD a Possible Target?
Exchange Market Depth data compiled by IntoTheBlock describes that LINK may have some difficulty breaking past the $7 mark. At the $7 zone, LINK traders are already placing orders to sell about 66 million tokens. But if LINK can clear this zone, the next significant resistance will be around $8.2 where there are 30 million LINKs pending for sale.
However, the bears could invalidate this bullish outlook if LINK slides below its 277 million buy wall at $6.22. If this support doesn't stop the decline, the price of LINK could fall further to $5.2 where another 17 million buy orders are pending.
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