Chainlink price has crashed and is approaching a crucial support level as traders anticipate the upcoming Grayscale LINK ETF and as supply in exchanges plunge. The token has plunged to a low of $12.25, down by 56% from its highest point this year.
Grayscale LINK ETF is Coming as Exchange Supply Plunges
Chainlink price remains in a bear market after losing almost half of its value in the past few weeks. However, there are at least two potential catalysts for the LINK price in the near term.
First, Grayscale will likely launch the first Chainlink ETF (GLINK) in less than two weeks. This was confirmed by Bloomberg’s Eric Balchunas, who also noted that the company will also launch its Dogecoin and XRP ETFs next week.
GLINK will be a conversion of the existing Grayscae Chainlink Trust, which has over $16 million in assets and a 2.50% fee into an ETF. It will be the first ETF tracking the coin.
READ MORE: XRP Price Reaches Pivotal Support as ETFs Near a $500M Milestone
The fund will come after Grayscale published a lengthy report explaining the case for Chainlink. In that report, Zach Pandl and Michael Zhao explained that Chainlink is one of the most important players in the crypto industry. They cited its role in connecting traditional and the digital finance. The report said:
“Chainlink’s broad and likely increasing adoption, the token’s straightforward approach to value accrual, and its distinct features compared to other large crypto assets make LINK a compelling addition to diversified crypto portfolios.”
The other potential catalyst for the LINK price is that the supply in exchanges is falling. Data compiled by Nansen shows that the supply has dived to 213 million, down from nearly 300 million in October, a 23% plunge.
Falling crypto supply in exchanges is a sign that investors are moving their tokens to self-custody, which is a good thing. It is also a sign that these investors are not selling their tokens.
LINK supply in exchanges | Source: Nansen
Chainlink Price Has Formed a Risky Pattern
LINK price chart | Source: TradingView
While Chainlink price has two bullish patterns, the weekly timeframe suggests that it may be on the cusp of a breakdown. It has formed the highly bearish head-and-shoulders pattern.
The chart shows that the head is at $30.86, while the left shoulder is at $22.7. Its right shoulder is at $27, while the neckline is shown in blue. This line connects the lowest levels since October this year.
Therefore, moving below this trendline will confirm the bearish outlook and point to more downside, potentially to $10.
READ MORE: When Will Crypto Go Back Up?
