LINK’s Price Performance

The downtrend remains intact on the daily chart

On-chain metrics analysis

Chainlink (LINK) experienced a significant price increase on Sunday, March 2, following the announcement of a U.S. strategic crypto reserve. This was subsequently affected by the President’s confirmation of tariffs on Mexico, Canada, and additional tariffs on Chinese imports, contributing to a 2.53% drop in the Dow from Monday’s highs. As a result, the entire crypto market declined, leading LINK to retrace its weekend gains, similar to Bitcoin (BTC).

NVT Metrics Impacted by Price Decline

The Network Value to Transactions (NVT) metric, which is the market cap divided by on-chain transaction volume in USD, indicated that a high NVT signifies an overvalued asset. In September 2024, NVT reached its highest since January 2020 due to falling on-chain volumes, which hit July 2023 lows. This trend shifted as volumes increased, reducing NVT during the November-December rally.

Over the past two months, LINK’s transfer volume decreased, coinciding with falling prices, which diminished enthusiasm and user activity. As of the last update, the NVT chart began to trend higher.

Investor Profit Strategy Considerations

The Market Value to Realized Value (MVRV) ratio provided deeper insights into market sentiment. Currently at 1.29, it indicates that holders are, on average, experiencing moderate profits. However, this MVRV figure is significantly lower than peaks seen in 2020 and 2021. The altcoin market’s dilution over the past four years suggests that LINK’s MVRV may never reach historic profit levels again due to relatively weaker bullish sentiment.

The Net Unrealized Profit/Loss (NUPL) ratio demonstrates that the current sentiment may be shifting towards fear, with the value at 0.18 compared to 0.62 in December. This signifies that unrealized profits have diminished as a result of the ongoing downtrend. Historically, the NUPL metric did not dip below 0.55 during the 2020-21 bull run, highlighting a significant performance disparity across economic cycles. Investors might consider more aggressive profit-taking if a trend reversal occurs in the coming months.