Chainlink (LINK) has been struggling to replicate its previous cycle’s strong performance, with current market metrics showing a shift towards bearish sentiment. While the token experienced a brief pump following the declaration of a U.S. strategic crypto reserve on March 2, 2025, it quickly retraced, mirroring broader market declines. The downturn raises questions about whether LINK’s market sentiment is turning more negative.

Declining Transfer Volume and NVT Metrics

One of the key indicators of Chainlink’s current struggles is the decline in its Network Value to Transactions (NVT) ratio. The NVT metric, which divides the market cap by the on-chain transaction volume in USD, has been trending higher recently. A higher NVT suggests that the market cap is high relative to the volume of transactions, often indicating that an asset is overvalued. This shift is concerning as it signals that the market may be getting more expensive without corresponding increases in actual transaction activity.

The NVT had reached its highest point since January 2020 in September 2024, as on-chain volume plummeted to levels last seen in July 2023. While the volume temporarily picked up during a November-December rally, it has since begun to decline again. Lower prices have dampened enthusiasm, further contributing to the negative trend in on-chain activity.

MVRV Ratio: Moderate Profit but Far From Previous Highs

The Market-Value-to-Realized-Value (MVRV) ratio, which helps assess the fair price of an asset, also paints a mixed picture for Chainlink. At the time of writing, the MVRV ratio for LINK was 1.29, indicating that holders were still in profit on average. However, this ratio is far from the peaks seen during the 2020-2021 bull run, where MVRV levels soared. Given that the broader altcoin market has significantly diluted over the past four years, it seems unlikely that LINK will reach the same profit levels seen in past cycles. The relative weakness of LINK’s bullish momentum suggests that investors may need to be more cautious about holding onto their positions for long-term gains.

NUPL Indicates Growing Fear

The Net Unrealized Profit/Loss (NUPL) metric, which measures the ratio of unrealized profits to unrealized losses, has been slipping as well. A high NUPL generally signals greed in the market, with more investors in profit. However, the recent downtrend in LINK’s price has caused NUPL to fall significantly. Currently, the NUPL value for LINK is 0.18, far below the 0.62 level reached during the peak of the 2020-2021 bull run. This drop suggests that investors are feeling increasingly fearful, as unrealized profits have been eroded by the prolonged downtrend.

In the past six months, LINK’s NUPL has struggled to break the 0.55 threshold, highlighting a stark contrast in sentiment compared to previous cycles. The weakening of investor sentiment and the continued price decline indicate that the current market is far less enthusiastic than in earlier bull runs.

Should Investors Take Profits?

With these indicators suggesting a bearish shift, investors may want to consider being more aggressive in taking profits, especially if the downtrend continues. The data shows that LINK’s performance is diverging significantly from its past bull cycle, and the lack of strong bullish momentum may leave the token more vulnerable to further declines.

In conclusion, Chainlink’s market sentiment appears to be turning increasingly bearish, with key metrics like NVT, MVRV, and NUPL signaling weakening investor confidence. While LINK is still in profit for many holders, the data points to a significant shift in market conditions, urging caution for anyone looking to hold long-term. Investors should remain vigilant and monitor these metrics closely in the coming weeks.