Chainlink (LINK) is facing increased downside pressure after failing to hold its crucial support zone at $12.5. Once a key foundation for bullish momentum, this level is now acting as resistance—raising concerns that the altcoin could be poised for a deeper decline.

After a short-lived rally toward $16 earlier this month, LINK has reversed direction and steadily lost ground. The inability to maintain higher highs or reclaim the $12.5 mark has cast a bearish tone over its short-term outlook. Now, with technical and on-chain data aligning, a drop toward $10—or even $7.5—seems increasingly likely.

$12.5 Support Flips to Resistance

The $12.5 price level had previously served as a significant support zone for Chainlink. However, after a sharp retracement over the past week, LINK is now struggling to break above this zone. Instead, price action suggests a classic support-turned-resistance setup—a bearish technical pattern that often precedes further declines.

The recent rejection at this level also coincides with LINK retesting a descending trendline. With no clear bounce or recovery, the market structure remains weak, and traders are growing cautious.

Weak On-Chain Signals Confirm Bearish Bias

Chainlink’s on-chain data appears to support the technical indicators flashing red. According to analytics platform CryptoQuant, LINK’s net exchange deposits have risen slightly above the 7-day average. While the spike is not dramatic, it still indicates increased selling intent among holders.

Typically, a rise in net deposits suggests that investors are moving their tokens from wallets and decentralized platforms to centralized exchanges—often a precursor to sell-offs. This trend, paired with LINK’s failure to hold support, adds weight to the bearish narrative forming on the charts.

Additionally, the broader crypto market has shown signs of hesitation in recent days, failing to build on previous gains. This lack of momentum across the market is further weakening sentiment around altcoins like LINK.

Liquidation Zones Signal Drop Toward $10

Liquidation heatmap data from CoinGlass has revealed clusters of long positions sitting near the $10 price level. These “liquidation zones” often serve as magnets during periods of price uncertainty, as market makers and whales seek to trigger cascading liquidations for profit.

If LINK continues to slide and approaches $10, the forced closure of leveraged positions could result in a sharp increase in sell pressure. This liquidation event might even push the price lower, toward $7.5—an important level last seen in Q4 2023.

Such a scenario would represent a significant reversal from the recent highs and could test the resilience of long-term holders.

Bulls Need to Reclaim $12.5 Quickly

With key indicators pointing south, the pressure is now on the bulls to reclaim the $12.5 level and reestablish it as support. A strong bounce from current levels could neutralize the bearish momentum and open the door for a renewed rally.

However, unless bulls step in with substantial volume, LINK risks continued weakness. The convergence of rising exchange inflows, weak market structure, and visible liquidation zones makes the bearish outlook more convincing in the short term.

Conclusion

Chainlink is at a critical juncture. The failure to hold the $12.5 support, combined with growing exchange activity and liquidation risk near $10, paints a cautious picture for the days ahead. Without a decisive move from buyers, LINK may continue its descent toward key downside targets. For now, the path of least resistance remains to the downside, and traders are advised to watch the $12.5 level closely for any signs of reversal or breakdown.