ChainLink (LINK) has experienced significant price fluctuations in recent weeks, raising concerns of another potential sell-off wave despite its recent price fall. After a bullish surge in September, where LINK rallied from $9 to $13, the asset has struggled to maintain its momentum and now shows signs of vulnerability according to on-chain data.

While LINK initially bucked the broader bearish trend of the crypto market in September, it has seen a sharp decline since the start of October, dropping back to the $10 mark. As the price attempts to recover, on-chain indicators suggest that LINK may face further downward pressure in the coming days.

Profit-Taking Signals Growing Bearish Sentiment

Recent on-chain data provided by IntoTheBlock reveals some concerning trends for ChainLink. One key indicator is the number of daily active addresses (DAA) in profit, which has jumped from 155 to 600 over the past week as LINK briefly surpassed the $12 mark. This rise in profitable addresses suggests that a significant portion of investors may be looking to lock in profits amidst the recent price volatility.

This increase in profit-taking activity signals a growing bearish sentiment in the market, as investors aim to secure gains ahead of further potential declines. As more addresses move into profit, the likelihood of a sell-off wave increases, which could put additional downward pressure on LINK’s price.

Loss-Making Addresses Also on the Rise

Compounding the concerns is the fact that the number of ChainLink addresses in loss has also surged recently. According to data, the number of addresses in loss rose from 222 on October 20 to 263 on October 22, indicating that some long-term holders may be capitulating and choosing to sell at a loss to minimize further potential damage to their portfolios.

This increase in loss-making addresses highlights a dual concern: on the one hand, some investors are selling to take profits, while on the other hand, others are selling to cut their losses. Together, these trends point to increased selling pressure, which could contribute to further price declines for LINK.

Whale Activity and Market Volatility

Another key factor contributing to the potential sell-off is the activity of large investors, or “whales.” Whale transactions, defined as transfers of at least $100,000 worth of LINK, have risen significantly in recent days. On October 19, there were 54 whale transactions involving LINK, but by October 22, that number had spiked to 134. In total, these whale transactions accounted for $361 million worth of LINK over the past week.

Whale activity is often closely watched as it can signal impending price volatility. The increase in whale transactions indicates that large investors are actively moving significant amounts of LINK, potentially in preparation for further selling. The heightened trading volume typically correlates with increased price volatility, and if these whales decide to sell their holdings, it could trigger a broader sell-off in the market.

LINK’s Price Struggles Amid Market Conditions

At the time of writing, ChainLink’s price has declined by 1.75% over the past 24 hours and is currently trading at $11.78. The asset’s market capitalization stands at $7.38 billion, with a daily trading volume of approximately $320 million. The increased trading volume, coupled with the surge in whale transactions, further signals that the market is experiencing heightened volatility.

While ChainLink enjoyed a bullish September, the recent market movements show that the asset is not immune to the broader crypto market’s bearish conditions. The combination of profit-taking, loss-cutting by long-term holders, and increased whale activity presents a challenging environment for LINK in the short term.

Market-Wide Momentum Could Change the Game

Despite the current bearish outlook, it is important to note that any shift in the broader cryptocurrency market could still impact ChainLink’s trajectory. Historically, LINK has followed the general market trends, rising during bullish periods and falling during downturns. If the wider crypto market experiences a renewed wave of bullish momentum, LINK could ride that wave to recover its recent losses.

However, for the time being, the data points to the possibility of further price declines as selling pressure mounts. Investors will need to watch closely for any signs of a broader market shift, but for now, ChainLink appears to be facing another challenging period of potential sell-offs.

Conclusion: Navigating Uncertain Waters

ChainLink’s recent price action highlights the ongoing volatility within the cryptocurrency market. While the asset saw a strong performance in September, its October slump and the rising on-chain sell signals suggest that more turbulence could be ahead. With both profit-taking and loss-cutting driving selling pressure, and whale activity indicating heightened volatility, LINK may face another sell-off wave before finding a stable price floor.

Investors should keep a close eye on market conditions, as any broader market momentum could help ChainLink recover. For now, though, the data suggests caution as the asset navigates these uncertain waters.