LINK’s on-chain activity discards bubble, LINK/USD drops after hitting all-time high
- Chainlink (LINK) has rallied >350% in 2020 and remains one of the top performers in the cryptocurrency market.
- LINK’s rally has led to some investors asking whether or not the cryptocurrency is in a bubble.
- LINK/USD faces bearish correction after it reached all-time high levels.
Chainlink (LINK) recently rallied by over 34% to reach a new all-time high of $8.48. In 2020, LINK has surged by >350% and remains one of the top performers. However, this isn’t the first time it has earned this title. In 2019, it rallied 1,481%, according to CoinMarketCap.
LINK’s rally has led to some investors asking whether or not the cryptocurrency is in a bubble. Since BTC’s price plummeted to $3,750 on March 12, numerous altcoins, especially those related to the DeFi market, have rallied into significant gains. LINK’s price action and the performance of other altcoins have convinced some investors that a new alt season has just kick-started. However, it’s crucial to observe LINK’s fundamentals to decide if the rally is driven by FOMO or a combination of more fundamental aspects.
According to CoinMetrics data, multiple data points support the price of LINK. For instance, total active addresses and the number of transactions have been increasing, indicating that the number of people holding and using LINK has been surging. Additionally, the number of entities (investors, firms, node operators) getting involved with LINK is also spiking. In June, China’s Blockchain Service Network integrated with Chainlink and is now running 135 nodes.
Chainlink’s increasing number of nodes and on-chain activity points to healthy growth in the network. However, other forces appear to be at play. For instance, demand for DeFi-enabled coins like LINK has been increasing as it provides high interest for yield farmers cultivating interest on protocols such as Aave.
As the DeFi sector continues to scale, so does the need for decentralized oracles, like ChainLink, to provide external data to smart contracts. This allows DeFi applications like insurance and gambling to be more secure and trustless. Increased demand for DeFi tokens could continue to help push LINK/USD more directly.
LINK/USD daily chart
LINK/USD continues its impressive rally despite a bearish start to Thursday. In fact, this Wednesday, LINK/USD managed to hit all-time high levels of $8.74.
The price has gone down from $8.66 to $8.57 in the early hours of Thursday. However, as we have previously seen, LINK/USD tends to push up high following a small bearish correction. The price has currently dropped back into the 20-day Bollinger Band. The RSI has been trending inside the overbought zone for the last 10 days.
Author
Rajarshi Mitra
Independent Analyst
Rajarshi entered the blockchain space in 2016. He is a blockchain researcher who has worked for Blockgeeks and has done research work for several ICOs. He gets regularly invited to give talks on the blockchain technology and cryptocurrencies.
