Chainlink (LINK) is approaching a critical turning point as it battles to maintain the $12.25 support level. After recently breaking below a long-standing ascending trendline, the altcoin is struggling to regain upward momentum, despite briefly reclaiming a descending trendline on the daily chart. Currently priced at $12.67, LINK has seen only modest gains of 0.41% over the last 24 hours, highlighting the uncertain sentiment gripping the market.

Technical indicators suggest that while bulls have stepped in to defend the $12.25 level, the overall momentum remains subdued. The $12.25 mark has now become a vital zone of support. Should LINK fall below it, bearish targets at $10 and even $7.50 may come into play. A sustained move above this level, however, could signal the beginning of a recovery.

New Partnerships Signal Long-Term Strength

Fundamentally, Chainlink has made strategic moves to bolster its ecosystem. One key development is its partnership with Pi Network, which is aimed at enhancing decentralized applications by integrating real-time data through Chainlink’s oracle technology. This collaboration could strengthen Chainlink’s position in the growing DeFi and Web3 sectors by boosting the utility of smart contracts.

Despite this positive news, the market response has been largely muted. This suggests that, at least in the short term, traders are focusing more on technical setups and broader market trends than on project fundamentals.

Exchange Reserves Hint at Accumulation

From an on-chain perspective, a slight decline in LINK’s exchange reserves is providing some hope for bulls. According to CryptoQuant, the total LINK held on exchanges has fallen by 0.2% in the past 24 hours, now sitting at approximately 156 million. This drop in supply could indicate that investors are moving assets off exchanges to hold for the long term, reducing sell-side pressure and potentially laying the groundwork for a price increase—provided demand kicks in.

Retail Interest Rises as Whale Holdings Slip

There’s also an observable shift in investor behavior. Whale wallets—those holding large amounts of LINK—currently control 46.1% of the total supply. However, their holdings have declined by 1.41% over the last month. In contrast, retail investor participation has increased, with a 1.77% rise in holdings and a marginal 0.36% gain in individual wallet balances.

This redistribution may indicate a growing belief among smaller investors in LINK’s long-term potential. It could also mean whales are taking profits or shifting focus, which introduces a cautious note to the bullish narrative.

On-Chain Activity Declines Sharply

Despite encouraging metrics on reserves and retail accumulation, broader network activity shows weakness. Data from IntoTheBlock reveals a sharp drop in user engagement:

• New wallet addresses are down by 44.25%

• Active addresses declined by 49.5%

• Zero-balance addresses fell by 56.62%

This retreat in on-chain activity suggests that many traders and investors remain on the sidelines, awaiting stronger price signals or a market-wide shift in momentum. Without renewed participation, LINK’s ability to mount a sustained recovery may be limited.

Conclusion: Market in Limbo, Eyes on $12.25

Chainlink finds itself at a crossroads, caught between encouraging developments like the Pi Network partnership and lower exchange reserves, and concerning signs such as falling whale interest and declining user activity. The $12.25 support level is now the critical battleground.

If bulls can hold this line and attract renewed trading volume, LINK could aim for a move toward $13.50 and beyond. But failure to defend this key level could see the token slip into a more prolonged correction, with the next significant supports near $10 and $7.50.

In the short term, the outlook remains mixed. Investors should monitor both price action and on-chain engagement closely, as the coming days could determine whether LINK is ready to break out—or break down.