Chainlink Bloodbath Begins: Will Retail Traders Get Left Holding the Bag Again?

Chainlink’s price tanks as whales dump—mainstreet investors brace for impact. Again.

Oracle network’s token sheds 20% in 48 hours, triggering PTSD flashbacks to 2022’s crypto winter. This time, the sell-off comes despite bullish fundamentals—because when has the market ever cared about those?

Retail traders now face their ultimate stress test: diamond hands or panic sells? The order books show limit buys stacking up at key psychological levels. But we’ve all seen how quickly ’support levels’ turn into trapdoors when Wall Street’s algo wolves start circling.

One thing’s certain: the ’smart money’ already took profits. As usual.

Most LINK holders are still in profit

Despite the whale’s recent sell-off, 75.57% of all LINK holders remain in profit according to IntoTheBlock’s Global In/Out of the Money data. Only 19.55% of addresses are currently holding LINK at a loss. 

This strong profitability profile suggests that most market participants are yet to experience sell-side pressure.

However, with the current dip in price, further drawdowns could motivate more holders to realize gains, amplifying the potential for increased sell pressure.

Source: IntoTheBlock

Whales retreat as retail steps in

In the past 30 days, whale concentration declined by 0.97%, indicating a slight reduction in large holder dominance. Meanwhile, retail participation grew by 0.97%, and investor holdings ROSE by 0.59%. 

This redistribution trend often suggests a transfer of assets from stronger to weaker hands.

The current dynamic may lead to more volatile price movements, as retail investors typically exhibit less holding conviction than whales or institutional holders.

Source: IntoTheBlock

The large holders’ netflow to exchange netflow ratio surged by 440.61% in the last seven days. This sharp increase in whale exchange deposits contrasts with the broader 30-day and 90-day trends, which remain negative. 

However, the short-term spike signals growing sell-side pressure from large addresses. This shift could explain recent price weakness, especially if further deposits continue to surface in the coming days.

Source: IntoTheBlock

Bullish conviction weakens as

LINK’s derivatives volume has dropped 28.77% to $885.76 million, while Open Interest has fallen 5.75% to $668.17 million.

This decrease in speculative interest often reflects fading momentum or caution among Leveraged traders. 

Therefore, traders might be reducing exposure in anticipation of short-term volatility, especially as large holders move assets to exchanges and the spot market faces uncertainty.

As of the 17th of May, 89.41% of LINK traders on Binance held long positions, with a Long/Short Ratio of 8.44.

Although the dominance of longs remains high, the ratio has started to decline, indicating softening bullish conviction. 

While the sentiment is still skewed toward upside expectations, the slight drop in long dominance may hint at early caution among perpetual traders, possibly triggered by the recent whale activity and falling price.

Source: Coinglass

Is LINK entering a redistribution phase?

The combination of whale sell-offs, increasing exchange inflows, and weakening derivatives interest points to early signs of redistribution. 

Although the majority of LINK holders are still in profit and long bias persists, a sustained increase in retail dominance and a drop in conviction from large players could open the door to short-term volatility. 

Therefore, LINK may be transitioning from accumulation to a redistribution phase if current trends continue.