Chainlink’s price joined other cryptocurrencies in a strong reversal as US bond yields surged to their highest levels in about two years. LINK, the biggest oracle network in crypto, fell to $21.21 on Wednesday morning, down over 31% from its highest point in December. So, is this the end of the Chainlink token rally?

Chainlink price analysis

The daily chart shows that the LINK price topped at $30.9 in December and has now suffered a harsh reversal to trade at $21.13. During this crash, the token moved below the key support level at $22.87, its highest in March last year. It was also the upper side of the cup and handle pattern.

Chainlink’s price has also gradually dropped below the 50-day moving average and the bottom of the trading range of the Murrey Math Lines tool. Moving back to that average price is a sign that the coin has formed a mean reversion, where an asset falls back to the moving average.

A closer look shows that the token has formed a head and shoulders pattern, a popular bearish sign whose neckline is at $19.87. A H&S pattern comprises a head, which is at $31, two shoulders, and a neckline. 

Therefore, from a technical standpoint, the token will likely continue falling in the next few days. More downside will be confirmed if it drops below the neckline at $19.8. A crash below that level will be a sign that bears have prevailed and will lead to more downside, potentially to the weak, stop & reverse point at $15.65. 

On the positive side, there are signs that the coin has formed a cup and handle pattern, a popular bullish sign whose upper side is at $23. The current pullback may be part of the pattern’s handle section. If this happens, Chainlink’s price may bounce back and later peak at the extreme overshoot of the Murrey Math Lines at $43.75. 

LINK has some solid fundamentals

Chainlink’s technicals are sending mixed signals about what to expect in the near term. However, the network has some of the best fundamentals in the crypto industry.

First, Chainlink recently introduced a new standard for crypto security that has attracted several projects. The recently launched Ripple USD (RLUSD) became the latest big token to join the network, a move that will provide it with quality off-chain data. More cryptocurrencies are expected to join this standard in the near term. 

Second, Chainlink has continued to extend its market share in the oracle industry, with a total value secured (TVS) of over $37 billion. It secures top projects like AAVE, Compound, and Spark, and is much bigger than other networks like Pyth, WinkLink, and Band Protocol. Chainlink’s total perpetual DEX volume secured in the last 30 days stood at over $44 billion.

Further, there are signs that whales are still accumulating the LINK token. For example, Donald Trump’s World Liberty Financial (WLFI) recently bought LINK tokens worth over $2 million, a good thing since he is becoming the US president in two weeks.

Chainlink has a strong staking yield of 4.32%. This yield is calculated by dividing the LINK rewards with the total staked. A 4.3% yield is good since it is higher than other networks like Solana and Tron.

There are also rising odds that the Securities and Exchange Commission (SEC) will approve a spot LINK ETF later this year. Such a fund makes sense since Chainlink is one of the top players in the crypto industry with a market cap of $13 billion. This approval will likely lead to more gains as it would lead to more LINK purchases by institutional investors.

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The US dollar index (DXY) retreated for three consecutive days ahead of the upcoming US nonfarm payrolls (NFP) data. It dropped from the year-to-date high of $109.53 to the current $108. So, will the DXY index bounce back or continue the ongoing downtrend?

Trump and his tariffs

The US dollar index continued its strong downtrend this week after the media reported that Donald Trump was considering shifting his stance on tariffs, claims that he has denied. 

Trump has committed to implement tariffs on most goods imported to the US, especially those from key trading partners like China, Mexico, European Union, and Mexico.

His goal for those tariffs is to reduce the trade deficit that has continued in the past few years. He also hopes to stir manufacturing in the US as companies seek for ways to avoid tariffs. Additionally, he sees tariffs as a good way to fund his tax cuts.

However, the reality is that these tariffs will not solve most of his goals. For one, it is unlikely that tariffs will lead to more manufacturing in the US, a country that has long bureaucracy, higher taxes, and minimum wage. 

Instead, Trump’s tariffs will likely lead to higher inflation as companies are forced to increase costs to cover the additional tariff costs. At the same time, countries will also retaliate by increasing tariffs on US goods.

Their tariffs may have a big impact on trade from the US. For example, Chinese airline companies will likely shift to the Airbus as cost of its planes fall. Other buyers of US oil may add taxes on it, making it more expensive. In other words, the US has more to lose than gain.

US jobs numbers and Fed minutes

The next key catalyst for the US dollar index will be the upcoming Federal Reserve minutes, which will come out on Wednesday.

These minutes will provide more information on what officials talked about in the last meeting of the year. In that meeting, they decided to slash interest rates by 0.25% and to maintain a fairly hawkish tone.

In a statement on Monday, Lisa Cook, a member of the Federal Reserve committee, noted that the bank would embrace a more hawkish tone this year. She believes that inflation is still stubbornly high, while the labor market has stabilized. 

The DXY index will react to the upcoming jobs data. The Bureau of Labor Statistics (BLS) will publish the latest job vacancy data on Tuesday. ADP, the biggest payroll company in the US, will release the private payroll data on Wednesday, while the Bureau of Labor Statistics (BLS) will publish the official numbers on Friday. 

These numbers will provide more information about the labor market, a key number that the Fed is watching when making the decision. 

Economists expect the data to show that the unemployment rate remained at 4.2% in December as it created over 140k jobs. 

DXY index analysis: is this the end of the rally?

DXY chart by TradingView

The US dollar index has been in a strong downtend this week. It moved from $109.53 to a low of $108. 

It has remained above the 50-day and 25-day moving average. The pair has retested the Woodie pivot point and moved slightly below the key support at $108.06, its highest point on $108.06. 

Therefore, the index will likely continue falling as sellers target the key support at $106.5, its highest swing in April 2024. That decline will be part of a break and retest pattern, which happens when an asset is in an uptrend. The index will then bounce back and move possibly to $110 later this year.

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The Vanguard Long-Term Treasury ETF (VGLT) and the iShares 20+ Year Treasury Bond (TLT) ETFs crashed hard this week as short and long-term US Treasury yields surged to a two-year high. 

The TLT ETF dropped to $86, down by over 14% from its August 2024 highs, and is at the lowest point since May 2. Similarly, the VGLT fund has crashed to $54.48, also its lowest point since May 29th. The two popular funds have continued to underperform the market as risks rise.

US bond yields are soaring

The main reason why the TLT and the VGLT ETFs have plunged is that US treasury yields have soared, meaning that their prices have slumped. Bond prices have an inverse correlation with yields. 

The 30-year US government bond yield surged to 4.92% on Wednesday, its highest level since November 2 and 26% above the lowest level in September last year. Similarly, the ten and five-year yield have continued rising. 

There are signs that the 30-year yield has formed an inverse head and shoulders pattern, a popular bullish sign in the market. This pattern is made up of a head, two shoulders, and a neckline, and often leads to more gains.

Worse, the 30-year formed a golden cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) flipped each other. This cross is one of the most bullish patterns in the market.

The 30-year yield’s Relative Strength Index (RSI) and the MACD have continued rising, a sign that there is momentum. Therefore, there is a risk that it will rise to the 2023 high of 5.17%, 

Why US yields are surging

US bond yields are soaring after a series of positive economic data pointed to higher interest rates for longer. 

Data by the Bureau of Labor Statistics (BLS) showed that the number of job vacancies in the US jumped to a six-month high of over 8 million. That is a sign that the labor market is still strong.

At the same time, there are risks that the US inflation will remain strong for a while. Last month’s data showed that the headline Consumer Price Index (CPI) rose from 2.4% in October to 2.7% in November. As a result, Fed officials now expect US inflation to reach the 2% target later in 2026. 

Some of Donald Trump’s policies are highly inflationary if they work out well. For example, a high tariff on imported goods would lead to a big price increase. The same is true of other policies, such as mass deportations and tax cuts. 

Looking ahead, the next important catalyst for the TLT and VGLT ETFs will be the upcoming US nonfarm payrolls (NFP) data. These numbers will provide more data about the state of the economy and guidance on what to expect from the Fed.

Read more: VGLT and TLT ETFs retreat; concerns of a black swan event rise

TLT ETF analysis

The TLT and the VGLT ETF always move in the same direction since they track the same assets. The daily chart shows that the TLT fund has been in a strong downtrend after peaking at $100 in September last year. 

It has formed a death cross pattern as the 200-day and 50-day moving averages crossed each other recently. 

The stock has dropped below the important support level of $88.9, its lowest level since November 8. The MACD and the Relative Strength Index (RSI) have also pointed downwards. 

Therefore, the path of least resistance is downward, with the next point to watch being $84.7, its lowest swing on April 24. A drop below that level will lead to more downside, possibly to $78.55, its lowest level in October last year. This TLT forecast is in line with our last outlook. The VGLT ETF will also likely follow the same direction.

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The Indonesian rupiah remained under pressure as most emerging market currencies continued to drop amid soaring US bond yields. On Wednesday, the USD/IDR exchange rate was trading at 16,200, up 7.55% from its lowest level in October. So, how will the soaring Indonesian forex reserves impact the currency?

Indonesia’s foreign reserves are surging

The falling Indonesian rupiah has a key backstop in that the foreign reserves have continued soaring and now sits at a record high. According to the central bank, reserves jumped by $5.5 billion last month, bringing the total to $155.7 billion. 

Foreign reserves have jumped, helped by higher taxes, oil and gas exports, and foreign loans have helped to boost these reserves. This trend may continue in the near term as the economy continues recovering.

The higher reserves will help the central bank intervene in the forex market to stem the sell-off. Central banks use their reserves to increase or reduce the dollar supply.

These reserves came as Indonesia and other emerging market currencies were under pressure following the election of Donald Trump in the United States. Some of the most notable ones like the Brazilian real and Indian rupee, have crashed to a record low this year. 

Indonesian central bank cuts

The Indonesian rupiah has crashed as the central bank slashed interest rates now that inflation has pulled back in the past few months. It slashed interest rates to 6% in September and has maintained them there since then. 

The most recent data showed that the headline Consumer Price Index (CPI) dropped to 1.57%, down from the 2022 high of 5.95%. This trend may slow in the near term as the Indonesian rupiah continue its downtrend. 

According to the statistics agency, the economy expanded by 4.95% year over year, slightly lower than its growth in Q2. Still, it is one of the best-performing economies in Asia.

Read more: USD/IDR: Why is the Indonesian rupiah in a freefall?

US dollar index surge

The USD/IDR has soared because of the ongoing US dollar index strength. The index jumped to $108.65 and is nearing this yearly high of $109.53. 

It has surged because of the bond market’s ongoing performance, as the 30-year and 10-year yields soared to their highest levels since 2023. 

Bond yields and the DXY index have continued rising as the market anticipates a more hawkish Federal Reserve.

Recent data showed that the US economy is strong enough to maintain higher rates this year. For example, data released on Tuesday showed that job vacancies soared to over 8 million, the highest level in over six months.

More data showed that the services and composite PMIs continued rising, an important thing since the sector is the biggest part of the American economy. 

The next important catalyst for the USD/IDR pair will be the US nonfarm payroll numbers, which are scheduled for Friday. These numbers will provide more information about the state of the American economy.

USD/IDR technical analysis

USD/IDR chart by TradingView

The daily chart shows that the USD to IDR exchange rate has been in a strong uptrend in the past few months. It has moved from 15,068 in September last year to a high of $16,200.

The pair is about to form a double-top pattern at 16,480, and is slowly forming a rising wedge. In most periods, these two patterns are some of the most bearish signs in the market. The Relative Strength Index (RSI) and the Percentage Price Index (PPI) have formed a bearish divergence pattern.

Therefore, the pair will likely rise and retest the resistance point at 16,480 and then resume the downtrend. 

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The honeymoon period is over for Ola Electric, the fast-growing Indian electric motorcycle company, as its stock continues its downtrend. Ola Electric’s share price has erased most of the gains made after its initial public offering in 2024. It has crashed by over 52% after peaking at ₹157 following its IPO. So, what next for the Ola Electric stock price?

Investor and customer issues persist

Ola Electric’s stock price continued its strong downtrend amid consumer and regulatory issues it has gone through in the past few months.

Indian regulators warned the company against posting on social media without informing investors first. This happened after the firm’s founder, Bhavish Aggarwal, posted about his store expansion plan without informing investors through regulatory filings first.

Ola Electric has also faced substantial challenges as more customers continue complaining about its products. A recent report showed that it had an over 80,000 complaint rate, as many users have taken to social media to complain about the products.

Therefore, there are significant risks that the company’s business will come under intense pressure as competition from firms like Honda, TVS, and Activa. These are some of the best-known brands and their electric products have a better reputation. As such, there are signs that the company will continue losing market share, which stands at 33%, to other established brands.

Read more: Ola Electric’s $734 million IPO: 2024’s largest in India—Should you invest?

Ola Electric’s finances are doing well

Despite its many challenges, there are signs that Ola Electric’s business is doing well as demand for electric bikes and scooters grows. The growth has been helped by demand and its stores, which it hopes to get to 2,000 by March. 

Ola Electric’s recent results showed that its top-line and bottom-line numbers steadily improved. Its revenue jumped by 35% YoY to over ₹1,240 crore as deliveries jumped by 73.6% to 98,619, up from 56,813 in the same period a year earlier. The management hopes that the quarterly deliveries will keep growing, and cross the crucial 100k mark.

Ola Electric’s gross profit margins improved by 12 basis points to 20.3%, while the EBITDA margin rose by 0.18% to minus 17.9%. Its EBITDA loss improved to ₹223 crore from the previous ₹321 crore.

The company also hopes that its innovation and vertical integration will help to boost its market share in the longer term. It also believes that global expansion may help it to grow its sales over time. 

Indian motorcycle companies have a long history of growing their businesses globally, and many have a strong market share there. 

Still, Ola Electric’s share price may remain under pressure as it works to boost its market share amid high competition from Indian and Chinese brands. These actions may reduce its margins as it is forced to cut prices.

Ola Electric share price analysis

OLA stock chart | Source: TradingView

The four-hour chart shows that the Ola Electric stock price has been in a strong downtrend and is now at the lowest swing since November 27. This decline is in line with our first Ola stock forecast.

It recently crashed below the key support level at ₹91.67, its lowest level on December 9 and the 25-period moving average. The Percentage Price Oscillator (PPO) has moved below the zero line, while the Relative Strength Index (RSI) dropped below 50.

Therefore, the stock will likely continue falling as sellers target the next point at ₹67.03, its lowest level in November. A crash below that level will point to more losses, potentially to ₹50.

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