Finance

Chainlink (LINK) Soars by 26% Within 6 Days: Can it Keep Climbing?

The Remarkable Rise of Chainlink’s LINK Token

Chainlink’s LINK token recorded a conspicuous 26% surging from November 2nd to November 8th, reaching almost $14, a price range it had not achieved since April 2022. This considerable growth strengthened its standing as the tenth biggest cryptocurrency, excluding stablecoins, in terms of market capitalization.

The recent price action certainly provides a welcome scene for traders. At an impressive valuation of $8.1 billion, one might ask if this is justified. Research reveals that the noteworthy surge in price seems to be fueled by the optimism towards the tokenization of real-world assets (RWA) and early signs of institutional adoption. Nonetheless, it is critical to examine whether the ongoing rally is sustainable.

Spot Bitcoin ETF Expectations and Real-World Asset Tokenization Galvanize Sentiment

It is essential to acknowledge the effect of recent research notes by strategists, James Seyffart and Eric Balhunas. They propose that approval for a spot Bitcoin exchange-traded fund is anticipated to kick off on November 9th. Although a 90% chance of approval is likely, the final verdict from regulators might be delayed until mid-January.

It is noteworthy to mention that other altcoins have also recorded remarkable price increases in the past one week, with Trust Wallet Token (TWT) surging by 41%, Immutable X’s IMX (IMX) by 29% and NEO by 28%. These gains in LINK and similar alts show the overall positive sentiment towards altcoins, especially considering Bitcoin’s apparent stagnation around the $35,500 mark.

Chainlink’s Ecosystem: Driving the LINK’s Recent Performance

Several positive aspects within the Chainlink’s ecosystem contributed to the LINK’s recent performance. On November 7, a significant development was Vodafone’s partnership with Sumitomo Corporation, a financial conglomerate based in Japan, which employed Chainlink oracles to ease transactions and provide diverse applications.

Besides the Internet of Things (IoT), there appears to be a broader trend that favors Chainlink’s oracle solution — RWA tokenization. Zhu Kuang Lee of HSBC notes an increasing demand for custody and fund administration of digital assets from managers and owners.

Institutional Demand for LINK Token Increasing

Despite the promising prospects, traders are wondering whether substantial institutional inflows into Chainlink support the impressive 26% rally accomplished in just six days. For instance, Grayscale’s Chainlink Trust (GLNK) offers an optimistic perspective, revealing robust demand for purchasing. GLNK’s price is trading at a 320% premium compared to the proportional underlying LINK holdings held by the fund.

Additionally, the listing of LINK on the HashKey exchange was another milestone that significantly contributed to Chainlink’s impressive gains. The HashKey exchange, a licensed trading platform launched in August 2023, serves professional investors in Hong Kong.

Chainlink’s Price Surge Supported by Increased Network Activity

From an on-chain metrics angle, Chainlink’s price surge is supported by heightened network activity. Interestingly, the most recent peak occurred on November 7, 2022. Excluding this specific instance, the current two-day average of 7,700 daily Chainlink transactions is the highest since June 2021.

While critics point out Chainlink’s high centralization, its oracle dominance remains unchallenged. Hence, any positive movement in the RWA market should likely impact LINK’s price favorably and might pave the way for further price increases above $14.

Note: This article is intended for general informational purposes and does not constitute legal or investment advice.

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