Recent on-chain data reveals that the supply of Chainlink (LINK) on exchanges is at its lowest point in about four years. This could be seen as a positive sign for the future performance of LINK.
The data, sourced from on-chain analytics firm Santiment, indicates that the recent rise in LINK’s value coincides with a decrease in its supply on exchanges.
Understanding “Supply on Exchanges” and Its Impact on Chainlink (LINK)
The term “supply on exchanges” means how much of the total Chainlink (LINK) is currently stored in wallets on big exchanges. When this number goes up, it shows that more investors are putting their coins into these platforms. Usually, this suggests that the holders might be planning to sell their LINK, indicating a possible decrease in the asset’s value.
On the flip side, if this number goes down, it means that a net amount of the cryptocurrency is moving out of exchanges. This is often seen as a sign that investors are collecting or holding onto their coins, which is generally good for the coin’s value in the long run. This shift toward holding onto coins is considered a positive signal for Chainlink’s possible future success.
Looks like the value of the metric has been going down in recent weeks | Source: Santiment on X
Chainlink Exchange Supply Drop Sparks Optimism
Analyzing the chart, a notable decline in the number of Chainlink coins on exchanges is evident. This decrease implies that more people are withdrawing their coins from exchanges than depositing. Currently at 14.87%, the percentage of coins on exchanges is at its lowest since February 5th, 2020—almost four years ago.
This reduction in available coins on exchanges aligns with a rise in the price of LINK, recovering from a dip below $13. While it’s a bit challenging to definitively say whether the lower number of coins on exchanges directly triggered the price increase, having this indicator at such a low level brings positive developments for Chainlink.
Shift Towards Self-Custody Boosts Chainlink Outlook
The positive aspect extends beyond the notion that many LINK investors are choosing to hold onto their coins. Another key factor contributing to the optimism is the decrease in the portion of LINK’s supply held by exchanges. This shift towards individuals holding their own coins is advantageous for any cryptocurrency, as it reduces the influence of major central entities in the market.
Given recent events such as the FTX collapse in 2022, which had significant repercussions on the entire market, the trend of more people keeping their coins in wallets with their own keys could play a role in preventing similar situations in the future. This move toward individuals having control over their coins aligns with the broader objective of enhancing the resilience and stability of the cryptocurrency world.
As of now, Chainlink is trading at around $15.3, marking a 13% increase over the past week. This positive price movement further complements the favorable trend of decreasing reliance on centralized exchanges, contributing to a more optimistic outlook for Chainlink.
LINK has seen some surge during the last few days | Source: LINKUSD on TradingView
Important:Â Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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