- Chainlink price sees bulls unable to pop above the $7.20 level.
- LINK price shows signs of weakness with lower highs for a fourth consecutive day.
- The decline comes with the green light for deliveries of heavy tanks from the US and Germany to Ukraine, creating the risk of nuclear weapons usage by Russia.
Chainlink (LINK) price action has been able to trade firmly higher in the beginning weeks of this year as quite a lot of tail risks from 2022 were moved a bit to the background. Since Wednesday, however, geopolitics is back to the top priority as the equilibrium on the battlefield is set to shift in favor of Ukraine, while the risk of more dirty and massive retaliation by Russia becomes bigger. Chainlink price is a perfect example of tail risks increasing and could be revalued near $6.31 in search of support as a risk premium needs to be factored in again.
Chainlink price heavy as risk premium demands repricing
Chainlink price has been trading higher in 2023, and LINK price action saw bulls advancing on the charts as several tail risks were fading a bit into the background. Markets were focused on the decline in inflation in early January, while that same inflation is still quite elevated. Ukraine was, from time to time, left out of the daily news as there was nothing new to report. That changed on Wednesday when Germany and the US finally relented to Ukraine’s begging for heavy tanks that could help it finally win back territory lost to Russia. . This news angered Russia as expected and possibly heightened the risk of nuclear retaliation.
LINK, trading heavily at a decreased risk premium for that basket of tail risks, now needs to be repriced again. Support at $6.50 looks quite thin, and it is more likely that Chainlink price will need a double layer of support, which is found at $6.31 with the 55-day Simple Moving Average (SMA) and the monthly pivot as a defensive belt of support. In case that level does not hold, the full rally will be unwound, with bulls getting slammed against support at $5.27.
LINK/USD daily chart
A decent jump on the back of some economic data either this Thursday or Friday would be welcomed by bulls that have done all the lifting and hard work thus far. That would mean that LINK breaks above $7.15 on the back of a good US GDP number later this afternoon or sees the PCE Deflator on Friday drop further as proof that inflation is still diminishing. That would put Chainlink price back on the road toward $9 in February.