Chainlink (LINK) appears to be setting the stage for a significant market movement, as key on-chain indicators suggest a looming supply crunch. With a substantial portion of its circulating supply held at a profit and available tokens on exchanges at historic lows, the stage is set for a potential price squeeze if market demand intensifies.
High Profitability Bolsters Holder Confidence
A remarkable 87.5% of Chainlink's circulating supply is currently held in profit, according to recent Glassnode data. This impressive figure reflects a sharp increase in profitability since early July, aligning with LINK's rally from under $15 to above $25. Such widespread profitability among holders typically reduces the incentive to sell at current price levels, as many are sitting comfortably on gains. This psychological factor significantly diminishes sell-side pressure, creating a resilient base for the asset.
Exchange Reserves Hit Multi-Year Lows
Further compounding the potential for a supply-driven rally are Chainlink's dwindling exchange reserves, which have plunged to multi-year lows. This reduction in accessible supply on centralized exchanges indicates that fewer tokens are readily available for sale, tightening the market. When combined with the high profitability reducing individual selling desire, this low exchange supply creates a volatile environment where even a moderate influx of fresh demand could quickly overwhelm the limited sell-side, potentially triggering a sharp upward price movement.
