An analyst explained that if LINK can break through this resistance level, the path to setting a new all-time high (ATH) for Chainlink will be opened.
Chainlink may encounter major resistance at the $20 level
In a new article on X, analyst Ali Martinez discusses the current resistance barriers regarding LINK's on-chain cost basis distribution.
Below is a chart shared by analysts from the market intelligence platform IntoTheBlock. It shows the number of assets acquired by Chainlink in every price range it has visited in its history.
As shown in the figure, many Chainlink investors purchased tokens in the range of $18.4 to $26.3. More specifically, about 100,220 addresses bought 57.2 million LINK at these price levels.
In on-chain analysis, the potential of any price range to act as support or resistance is measured by the number of tokens purchased within it. The reasoning behind this lies in investor psychology.
In general, holders perceive their cost basis as being at special levels, as retesting that level could change their profit and loss situation. Therefore, when a retest occurs, they are more likely to make panic moves.
Investors who incurred losses before the retest may worry that prices will rebound quickly, so they may tend to sell and recover funds.
Similarly, holders whose cost basis is retested from above may decide to accumulate more, believing that the level will eventually become profitable again.
When the cost basis of a small number of investors is retested, neither influence has a significant impact. However, when the cost basis of many addresses is within a narrow range, the reaction generated by the retesting may be large enough to cause noticeable asset volatility.
The aforementioned Chainlink price range hovers around the average of $22, occupying the cost basis of many investors, making it difficult for LINK to break through these levels.
However, as Martinez pointed out, if the cryptocurrency can break through this hurdle, it could easily set a new all-time high, as there aren't many investors whose acquisition levels are in the price range beyond the $22 demand zone.
As for the ranges below the current price, there are several larger ranges nearby, such as $13 to $15 and $11 to $13. If the asset undergoes a correction, these levels may help cushion the decline.
LINK price
Chainlink has risen nearly 10% in the past 24 hours, reaching a price of $18.4.
