Crypto Analyst Warns of Bearish Signal for Ethereum-Based Altcoin
A crypto analyst has identified a bearish signal for an Ethereum-based altcoin, according to recent reports. Ali Martinez, an analyst with a substantial following on Twitter, suggests that Chainlink (LINK), the native asset of the decentralized oracle network, could be due for a brief correction.
Martinez bases this prediction on data from Santiment, a crypto analytics firm. He highlights that in the past, when LINK’s market value to realized value (MVRV) ratio exceeded 19%, significant corrections followed. Currently, LINK’s MVRV stands at 20%.
The MVRV ratio is a measure of an asset’s current market capitalization divided by its realized capitalization. By analyzing this metric, traders can identify overbought or oversold conditions. Martinez anticipates that after a short correction, LINK will continue to reach new highs. At the time of writing, the altcoin is trading at $7.40.
Alongside his analysis of LINK, Martinez also examines Bitcoin’s Relative Strength Index (RSI). The RSI is a widely used momentum indicator that helps determine whether an asset is overbought or oversold. Martinez points out that whenever Bitcoin’s 4-hour RSI hits or surpasses 74.21, the cryptocurrency tends to retrace. Currently, the RSI on the 4-hour chart has reached 82.83.
The RSI ranges from 0 to 100, with a reading below 30 being considered bullish and a reading over 70 signaling a bearish trend. Bitcoin is currently trading at $27,362.
It’s important to note that the opinions expressed by analysts are not investment advice, and investors should conduct their own research before making any decisions. These predictions are based on technical analysis and historical patterns, but the cryptocurrency market is highly volatile and can be unpredictable.
In conclusion, the potential bearish signal for Chainlink and the warning regarding Bitcoin’s RSI should be taken into consideration by investors. These indicators suggest that a correction may be imminent, but as always, caution and careful analysis are crucial when navigating the cryptocurrency market.