Chainlink’s LINK Token Surges 26%, But Is It Justified?

Chainlink’s LINK Token Surges 26%, But Is It Justified?

Chainlink’s LINK token has experienced a remarkable 26% surge between November 2nd and 8th, reaching a level not seen since April 2022. This surge in price has solidified its position as the 10th largest cryptocurrency (excluding stablecoins) by market capitalization. While this is a welcome sight for traders, the question arises: is Chainlink’s current valuation of $8.1 billion justified?

Cointelegraph research reveals that the impressive price surge is driven by expectations of real-world asset (RWA) tokenization and initial signs of institutional adoption. This indicates that investors and traders are optimistic about the future of Chainlink. However, it is essential to delve deeper and assess the sustainability of the current rally.

Bloomberg’s exchange-traded fund (ETF) strategists, James Seyffart and Eric Balhunas, recently issued a research note that has boosted the confidence of cryptocurrency traders. In their note, they explain that the window for approving a spot Bitcoin (BTC) exchange-traded fund is set to open on November 9th as the United States Securities and Exchange Commission (SEC) concludes its latest round of postponements.

Seyffart maintains a 90% likelihood of approval for the spot Bitcoin ETF, but he cautions about the possibility of a delay in the final decision until mid-January. This news has not only impacted Bitcoin but has also led to notable price increases in altcoins like Chainlink.

Within Chainlink’s ecosystem, several positive developments have contributed to the recent performance of the LINK token. One such development is the official partnership between Vodafone, a major European and North Africa-based telecom company, and Japanese financial conglomerate Sumitomo Corporation.

Through this partnership, Chainlink oracles facilitate transactions and enable various applications, including electric vehicle charging stations and toll roads, on a digital platform known as Pairpoint. This platform allows vehicles and devices to autonomously interact and trade in the emerging Internet of Things (IoT) landscape. Pairpoint has integrations with major partners such as Mastercard, HSBC, Deloitte, and IBM.

Apart from IoT, there is a broader trend favoring Chainlink’s oracle solution. The tokenization of real-world assets (RWA) is poised to become mainstream. HSBC recently launched custody services for regulated securities, indicating the increasing demand for custody and fund administration of digital assets from asset managers and owners.

HSBC’s press release also mentions their HSBC Orion platform for issuing digital assets and a tokenized gold offering. With HSBC managing approximately $3 trillion in assets globally, this development further solidifies the potential future prospects for Chainlink.

Institutional Inflows and Support for the Rally

Traders have raised questions about whether substantial institutional inflows have taken place to support the 26% rally in just six days. While there is no foolproof metric to gauge this, Grayscale’s Chainlink Trust (GLNK) presents an optimistic perspective, despite its relatively modest $3.9 million in assets under management.

GLNK is an over-the-counter instrument traded through regular stock market brokers, making it accessible to asset managers who cannot directly invest in cryptocurrencies. The fact that GLNK’s price is trading at a 320% premium compared to the proportional underlying LINK holdings held by the fund indicates robust buying demand.

Furthermore, the listing of LINK on the HashKey exchange, a licensed trading platform catering to professional investors in Hong Kong, has fueled the impressive gains. Although the exchange launched in August 2023, it is affiliated with HashKey Capital, a prominent digital asset venture investment firm founded in 2015.

Supporting On-Chain Metrics

From an on-chain metrics perspective, Chainlink’s price surge is supported by increased network activity. The most recent peak in network activity occurred on November 7th, 2022, coinciding with issues at the now-defunct FTX exchange. Excluding this specific instance, the current two-day average of 7,700 daily Chainlink transactions is the highest since June 2021.

While some valid criticisms have been raised regarding Chainlink’s excessive centralization, its oracle dominance remains unchallenged. As a result, any tailwind for the RWA market is likely to have a positive impact on the price of LINK, potentially paving the way for further price hikes above $14.

Chainlink’s recent surge in price is driven by expectations of RWA tokenization and initial signs of institutional adoption. The positive developments within Chainlink’s ecosystem and the growing trend of RWA tokenization support the optimism surrounding LINK’s future prospects. Additionally, the presence of Grayscale’s Chainlink Trust and the listing on the HashKey exchange indicate growing institutional interest and demand. While criticisms of Chainlink’s centralization exist, its oracle dominance remains unchallenged. With increased network activity and the potential for further tailwinds, the current rally in Chainlink’s LINK token may be justified.


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