Smart Money’s withdrawal highlights the vulnerability of LINEA’s market confidence

LINEA is currently facing significant downward pressure, as both technical signals and on-chain metrics suggest a possible move to new record lows. In the last 24 hours, smart money investors have unloaded more than 23.9 million tokens—nearly 85% of their total holdings—worth around $598,000 at the prevailing rate of $0.025. This substantial sell-off coincides with the collapse of a prominent head-and-shoulders chart formation, a well-known indicator of potential trend reversals to the downside.

The breakdown, which was validated on September 16, sets a projected target near $0.019. Reaching this point would establish a new all-time low for LINEA. Supporting this bearish scenario, the Money Flow Index (MFI)—a volume-based momentum indicator—has been declining since early September. A falling MFI paired with decreasing prices signals weak demand and limited support for lower price ranges. Despite this, some of the largest wallets, often referred to as "megawhales," accumulated 157.4 million tokens during the same period, suggesting that some investors are still backing the token.

Nevertheless, buying activity from these major holders has not been enough to inspire broader market confidence. The downward trend in the MFI reveals that most purchasing is taking place during brief market rallies instead of deeper corrections, reflecting speculative behavior and a lack of sustained conviction. This disconnect between price action and money flow highlights the vulnerability in the current market setup. While there have been net outflows from exchanges—which means tokens are leaving trading platforms—the main support continues to come from large, institutional wallets rather than a wide base of buyers.

Technical analysis further reinforces the bearish outlook, with the head-and-shoulders breakdown intensifying negative sentiment. For the trend to shift, LINEA would need to first recover to $0.029 to start reversing the bearish outlook, and then surpass $0.033 to regain bullish momentum. Until these thresholds are reclaimed, persistent selling from informed investors and a weakening MFI suggest the downward trend is likely to continue. At present, the token trades close to $0.025, marking a drop of over 40% since its September 10 peak, and a 9% decrease in just one day.

External market factors are also at play. As the broader digital asset market anticipates possible interest rate reductions from the Federal Reserve, LINEA has emerged as one of the day's top decliners. This sharp decline is partly attributed to the turbulent airdrop event on September 10, which resulted in the price plunging 93% within just a few hours. Ongoing issues from the airdrop—including delayed token distribution for retail investors and early selling by large holders—have further damaged market sentiment. Additionally, the token’s economic model, which saw a substantial portion of the supply become available early, has sparked concerns about inflation and the project’s ability to sustain value over time.

Recent price swings have also exposed the shortcomings of relying solely on the MFI. While it can highlight potential divergences and indicate overbought or oversold conditions, it is not reliable for pinpointing exact market tops or bottoms. In the volatile world of cryptocurrency, the MFI works best when combined with other analytical tools like trendlines, support and resistance zones, and volume analysis. Given the current MFI reading and the broader technical and on-chain context, the case for continued bearishness appears strong, at least in the immediate future.