Chainlink Reserve Growth Tightens Supply as LINK Struggles Below $10

Key Insights:

• Chainlink reserve accumulation continues, removing tokens from circulation, tightening available supply while market demand remains insufficient to trigger meaningful price recovery.

• LINK trades within a bearish pennant below $10, with lower highs and fragile support reinforcing downside risk toward the $5.77 level.

• Exchange outflows reduce sell pressure, yet dominant long liquidations and weak momentum indicators confirm that sellers maintain control across current market conditions.

Chainlink’s reserve has added 131,905 LINK, lifting total holdings to nearly 2.79 million tokens while the asset trades below key resistance. This steady inflow reflects deliberate accumulation rather than short-term positioning. Moreover, the increase in reserve custody continues to remove tokens from active circulation.

As tokens move into reserves, circulating supply across exchanges keeps shrinking, which reduces immediate selling pressure. However, the price has not responded with upward momentum despite this tightening. Consequently, the market appears to absorb supply changes without triggering stronger demand or directional expansion.

Price Structure Keeps Sellers in Control

LINK remains capped below the $10 level while forming a bearish pennant that signals ongoing consolidation. The price recently dropped to $7.84 before stabilizing near $8.89, reflecting compression after a sharp decline. Additionally, lower highs continue to press against resistance, which limits recovery attempts and reinforces seller dominance.

The current pattern leans toward continuation rather than reversal as support levels remain fragile. A breakdown from this structure could expose the $5.77 level as the next downside target. However, minor rebounds continue to face rejection near the upper boundary, keeping the broader trend under pressure.

Momentum Indicators Reflect Weak Strength

The Relative Strength Index stands at 46.37, signaling weakening momentum across recent sessions. Instead of building upward pressure, the indicator has turned lower, aligning with price compression. Hence, buyers have yet to regain control despite short-term stabilization in price action.

Source: TradingView

Exchange netflows have declined by over 15%, indicating fewer tokens entering trading platforms for potential selling. This shift highlights rising outflows, which reduces immediate sell-side pressure. Additionally, lower inflows limit the risk of sudden declines, although they have not triggered a strong recovery in price.

Liquidations Show Continued Long Pressure

Recent liquidation data shows a clear imbalance, with long positions facing heavier losses than shorts. Around $55.8K in long liquidations contrasts with significantly lower short liquidations. Consequently, this dynamic reflects ongoing pressure on bullish traders and weak support from leveraged positions.

The lack of significant short liquidations suggests sellers remain stable and are not forced to exit positions. Moreover, this reduces the likelihood of a short squeeze that could drive rapid upside movement. The current derivatives positioning continues to support the prevailing bearish structure.