3 factors that could drive Chainlink (LINK) below $10

Chainlink (CRYPTO:LINK) has faced significant challenges recently, and several factors suggest its price could fall to single digits.

One key metric impacting Chainlink's performance is the price-Daily Active Addresses (DAA) divergence.

This indicator, which measures the relationship between a cryptocurrency's price and its network activity, shows a -56.35% divergence for LINK.

This negative divergence indicates a weak connection between LINK’s price and user engagement.

Typically, a decrease in DAA signals bearish momentum, suggesting LINK's price struggles to reflect actual network activity.

Another factor to consider is the In/Out of Money Around Price (IOMAP) indicator.

This tool identifies support and resistance levels based on the number of addresses that purchased LINK at various price points.

Currently, about 5,540 addresses bought 4.46 million LINK at approximately $10.16, which is considered in the money.

In contrast, over 8,000 addresses acquired 17.94 million LINK at around $10.52, which places them out of the money.

This distribution points to potential resistance at higher levels, indicating LINK could struggle to maintain its price and may drop to around $9.72.

Additionally, technical patterns have shown that LINK recently broke out of a bearish pennant pattern, typically signaling a continuation of a downtrend.

Although there was an initial rise to $12.62, the price fell by 19.38%, suggesting the earlier uptrend might have been a false signal.

The resistance level at $10.73 could lead to a significant pullback if it holds.

According to the Fibonacci retracement indicator, LINK’s next support target might be $9.72.

However, if the broader altcoin market experiences a resurgence, LINK could break through the $10.73 resistance and potentially reach $11.55.

The overall market conditions will play a crucial role in determining LINK’s future price trajectory.

At the time of writing, the Chainlink (LINK) price was $10.74.