Chainlink MVRV Ratio Indicates Potential Steep Correction
Recent on-chain data reveals that the Chainlink MVRV ratio has surged as LINK surpassed $10, suggesting a possible significant correction for the asset. The MVRV ratio, which stands for Market Value to Realized Value, compares the Chainlink market cap with the realized cap.
Understanding Realized Cap and MVRV Ratio
The realized cap is a measurement of the total capital invested by Chainlink holders based on the price at which each coin was last transferred on the blockchain. By comparing the market cap with this metric, the MVRV ratio offers insights into investors’ profit or loss situation.
An analyst shared a chart showing the trend in the 7-day moving average of the Chainlink MVRV ratio over the past year and a half, indicating a sharp upward momentum.
Potential Profit-Taking and Correction
The MVRV ratio has crossed the 21% mark, suggesting that investors who purchased LINK within the last 30 days are holding 21% more value than their initial investment. Historically, high profits held by investors often lead to profit-taking and potential corrections in price.
In previous instances when the MVRV ratio exceeded 20% for this group of investors, LINK experienced significant declines of 34% and 14%. Therefore, based on this pattern, another correction could be expected for Chainlink.
Current LINK Price
In the past 24 hours, Chainlink has seen a further 9% increase in price, breaking above $10.1.
Hot Take: Potential Correction Ahead for Chainlink
Recent data suggests that Chainlink may be due for a steep correction as its MVRV ratio reaches levels seen before significant drawdowns. The current high profits held by investors who bought LINK within the last 30 days indicate a potential risk of profit-taking. Historical patterns show that when the MVRV ratio exceeded 20% in similar scenarios, Chainlink experienced notable declines in price. With a 9% increase in the past 24 hours, it’s important to monitor the market closely for a potential correction in the near future.
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