Chainlink (LINK) investors were dealt a surprise blow on 26 August after the token shed nearly 20% in value, despite positive news surrounding a newly filed spot Exchange-Traded Fund (ETF). While institutional adoption and retail interest remain strong, technical patterns suggest the recent correction may not yet be over.

ETF Optimism Meets Market Reality

Bitwise Asset Management officially filed for a spot Chainlink ETF on 26 August, adding LINK to the growing list of crypto assets pushing into traditional finance products. The move reflects Chainlink’s strong institutional backing, as its decentralised oracle network continues to play a crucial role in blockchain infrastructure.

The ETF was expected to ignite renewed enthusiasm among older, retail-focused investors, many of whom have been more comfortable accessing crypto via traditional investment vehicles. However, instead of fuelling a sustained rally, LINK tumbled nearly 20% following the announcement.

This paradox of “positive news, negative price” underscores the current fragility of market sentiment, where short-term technicals appear to outweigh long-term bullish fundamentals.

Why Chainlink is Falling

Chainlink’s price has staged an impressive run in 2025. From a low of $10.10 in April, LINK doubled, peaking at $27.87 on 22 August. Along the way, the token created a higher low in June and accelerated its ascent in August.

Yet this strong rally formed a bearish ascending wedge, a pattern often preceding sharp corrections. The breakdown materialised on 25 August when LINK printed a bearish engulfing candlestick, signalling the end of its upward phase.

Momentum indicators reinforce this bearish turn. The Relative Strength Index (RSI) showed a bearish divergence before the fall, while the Moving Average Convergence/Divergence (MACD) indicator flashed a bearish cross soon after. Together, they point to weakening market momentum.

Analysts now look to Fibonacci retracement levels for potential support. The first significant level sits at $21.40, with a more robust confluence of Fibonacci and horizontal support around $19.40.

Short-Term Outlook: More Downside Likely

From a wave count perspective, LINK’s rally appears to have completed a five-wave diagonal structure within the wedge pattern. Historically, such setups often precede corrective phases.

The current decline may therefore represent wave A of an A-B-C corrective structure, with Fibonacci support levels serving as key potential landing zones. Projections based on the Fibonacci Time Zone tool suggest that this correction could play out until mid to late September, specifically between 10 and 25 September.

If this scenario holds true, LINK is expected to at least revisit $21, with further downside risk toward $19 before a decisive bounce can occur.

Long-Term Prospects: Bullish vs Bearish Counts

Beyond the short-term, Chainlink’s long-term trajectory remains uncertain. Two primary interpretations of the wave structure have emerged:

• Bearish Case: LINK has completed a larger A-B-C correction and is on course for a deeper decline, potentially breaching previous lows. Under this view, support at $19 may fail to hold.

• Bullish Case: LINK is in the early stages of a broader uptrend, with the recent five-wave advance marking the first of multiple impulsive waves. In this interpretation, the correction would be temporary, with support at the 0.382 Fibonacci retracement serving as a springboard to new highs.

Interestingly, since the two previous upward movements lack proportional symmetry, the bullish count suggesting separate wave ones, currently appears more plausible. If validated, it would mean LINK is undergoing a healthy correction before resuming its broader uptrend.

What’s Next for LINK?

Chainlink finds itself at a critical juncture. Despite the optimism surrounding Bitwise’s ETF filing, the market reaction has been dominated by bearish technical signals. In the short term, analysts widely expect a retest of $21–$19 levels, with price action over the next two to three weeks being crucial.

For investors, the key question is whether this correction stabilises into a controlled retracement or cascades into a more impulsive decline. Should LINK hold support and confirm a bullish reversal, the long-term narrative of Chainlink as a cornerstone of blockchain adoption remains intact. Conversely, a breakdown could extend losses significantly.

For now, the paradox of strong fundamentals and weak short-term price action highlights the complex dynamics driving crypto markets where sentiment, technicals, and institutional moves intersect in unpredictable ways.