Chainlink’s recent price surge of 63% has turned heads in the cryptocurrency community. This uptrend begs the question: what is driving investor confidence in Chainlink? Let’s look at four key reasons that could be contributing to this uptrend.
#1 Chain Link Domination in the Oracle Space
Oracles act as a bridge between blockchain networks and the outside world, retrieving the data that decentralized applications (dApps) rely on to operate. This data can vary widely, from essential cryptocurrency price feeds for decentralized finance (DeFi) platforms to weather information or real-world event outcomes for betting platforms.
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Chainlink has become the leader in this crucial market, capturing a 47% share thanks to its vast network of over 1,000 oracles and support for over 14 blockchain platforms. By positioning itself as the leading provider of external data integration, Chainlink has become an essential component of blockchain infrastructure.
#2 Other products by Chainlink
Beyond its initial focus on data feeds, Chainlink now offers a wide range of blockchain services that have significantly strengthened its presence in the market:
- Verifiable random function (VRF) – a verifiable method for producing complete randomness at low cost, particularly useful for creating random outcomes in gaming and chance applications, as well as any application requiring unpredictability in its protocol.
- Automation – allows smart contract developers to use Chainlink’s infrastructure to automate their smart contracts in a cost-effective and secure manner, which is crucial for the scalability and efficiency of decentralized applications (dApps).
- Cross-Chain Interoperability Protocol (PICC) – enabling seamless interaction and transfer of data and value across blockchain networks. This interconnectivity is essential for a more integrated and accessible blockchain ecosystem.
The introduction of CCIP, in particular, highlights Chainlink’s commitment to advancing the industry. It simplifies the user experience and expands the potential use cases of blockchain technology, very attractive aspects for institutional investors looking to enter this area.
#3 Institutional interest
Chainlink’s CCIP and other products have enabled it to collaborate with large institutions, such as:
- SWIFT – a global financial network that more than 11,000 financial institutions use to securely transmit information and values worth up to billions of dollars.
- DTCC – a global financial entity that processes and settles securities transactions totaling quadrillions of dollars.
- ANZ – one of the big four banks in the Asia-Pacific region, managing billions of dollars each year.
- Other notable institutions working with Chainlink are BNP Paribas, Citi and PwC Germany.
These partnerships highlight that institutions see the potential opportunity for effective interaction between blockchains and real-world systems. Chainlink co-founder Sergey Nazarov says:
It is now clear that the world’s largest banks and leading market infrastructures believe that digital assets will see greater adoption across the banking industry, and that this adoption will occur using several different blockchain technologies simultaneously.
#4 Bullish Price Action
Chainlink had traded between $5 and $9 between June 2022 and September 2023. In October, its price finally managed to break out of this range after an increase of 63%, reaching $12. This price increase was one of the largest in the cryptocurrency market, highlighting investor confidence in the token.
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The price is currently within a previous trading range between $11 and $17. For the price to reach the top of this range, it would need to rise another 50%.
Chainlink's Price Action on the monthly chart. Source: LINKUSD from TradingView
With its previous all-time high of $53, this suggests that there is still plenty of room for Chainlink’s price to rise. Specifically, it would take a 340% increase for it to reach its previous highs.
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Featured image from Shutterstock, charts from TradingView.com