Chainlink Exchange Supply Hits 4-Year Low: Bullish Momentum Ahead?

Recent on-chain data reveals a significant drop in Chainlink's supply on exchanges, reaching a four-year low. This development prompts speculation about potential bullish momentum for LINK.

Declining Supply on Exchanges:

On-chain analytics firm Santiment reports a notable decrease in Chainlink's supply on exchanges, a key metric indicating the amount held in centralized exchange wallets.

Interpreting Exchange Supply Trends:

An increase in the "supply on exchanges" suggests investors depositing coins for potential selling, posing a bearish outlook. Conversely, a decrease implies a net withdrawal, indicating potential accumulation and a bullish outlook in the long term.

Looks like the value of the metric has been going down in recent weeks | Source: Santiment on X

Historical Supply Trend:

Graphical representation illustrates a sharp decline in Chainlink supply on exchanges, hitting a record low of 14.87%, the lowest since February 5, 2020.

Price Rebound Amidst Low Exchange Supply:

The decline in exchange supply coincides with a recovery in LINK's price, bouncing back from a dip below $13. The correlation between outflows and price action suggests a positive development, though the exact relationship remains uncertain.

Optimistic Implications for Chainlink:

The low exchange supply not only indicates investor interest in holding LINK but also signals a reduction in the portion held by centralized exchanges. This move towards self-custody is seen as favorable, minimizing the market impact of central entities.

Guarding Against Market Volatility:

Reference is made to recent market disruptions, such as the FTX collapse in 2022, emphasizing the potential risk reduction when investors opt for self-custody rather than relying on centralized entities.

Current LINK Price and Performance:

Chainlink is currently trading at approximately $15.3, reflecting a 13% increase in the past week.

LINK has seen some surge during the last few days | Source: LINKUSD on TradingView

The notable decrease in Chainlink's supply on exchanges, coupled with a price rebound, hints at optimistic prospects for LINK. The shift towards self-custody and reduced reliance on centralized exchanges positions Chainlink favorably in the evolving cryptocurrency landscape.