Key Takeaways
Chainlink saw a rapid increase in daily active addresses in recent months, but the reduced retention rate could be a warning sign in the long run. In the short term, market sentiment was bullish.
Chainlink [LINK] has performed strongly bullishly in recent weeks. Since the 15th of July, LINK has recorded a 57.6% gain on the price charts in a little over a month.
During this time, Bitcoin [BTC] lacked a strong price trend and witnessed a drop to $112k before rallying to $124.5k.
Chainlink’s relatively strong performance came alongside a bullish altcoin market trend. The short-term sentiment behind the token has also flipped bullishly.
Source: Coinalyze
Over the past 24 hours, LINK saw a 3% price gain and a 19.6% increase in Open Interest. This pointed toward high speculative activity and implied that traders were willing to long and bet on a recovery.
The spot CVD has begun to tick higher, showing increased demand. The positive Funding Rate agreed with the idea that traders were predominantly bullish.
The network activity metrics showed that LINK has the potential to go higher in the coming weeks. However, AMBCrypto found that they also gave a small warning sign.
New demand and further LINK growth
Source: Glassnode
Since July, the daily active addresses metric has rocketed higher. On one hand, this was a firmly bullish signal that the network is attracting new users.
On the other hand, like in December 2024, a huge spike in activity can also be a warning sign of dormant holders moving their tokens to sell.
Source: Glassnode
Holders need to be cautious when the daily active addresses increase dramatically, especially when the activity retention rate drops.
The retention rate reflects whether participants continue to engage with the network consistently.
Since April, the metric has fallen from 24.5% to 17%. This was a cautionary sign, as the new activity could be from fickle users and not long-term users.
The falling retention and rising activity warned of a potential speculative bubble that might not be sustainable.
The opposite had been true in the first few months of 2025. From January to April, the daily active addresses fell, and the retention rate rose.
This pointed toward a slow-growing base of users, although it was not attracting a large number of new users.
This phase of growth was followed by a Chainlink price appreciation.
The price charts signaled that it was highly likely LINK would challenge $30 in the coming weeks, but any further gains would be dependent on the performance of Bitcoin and Ethereum [ETH].
