Chainlink overtakes Bitcoin Cash: Between DeFi bubble and $32 prediction

  • Chainlink (LINK) has overtaken Bitcoin Cash (BCH) and has managed to position itself as the 5th largest cryptocurrency by market capitalization.
  • The strategic positioning of Chainlink and the growth of the DeFi sector are among the reasons for LINK’s rally.

Chainlink (LINK) continues to conquer the crypto market. The decentralized oracle network seems unstoppable and, at the time of publication, shows a gain of 71.44% over the last week. Within the top 10 cryptocurrencies by market cap, LINK is the only one that is holding exorbitant profits. This has not gone unnoticed by investors, as a result of which LINK has been able to move up to 5th place and oust Bitcoin Cash.

LINK is trading at $16.63 with a gain of 27.61% within the last 24 hours. Within the last week, LINK has managed to break through important resistance levels to reach a new all-time high. Analyst Josh Rager has been bullish on LINK for the last few weeks. The expert stated the following and shared the chart below:

For about the hundredth time, when $LINK dips, it usually outperforms every other asset on the bounce. Higher close on 4-hr chart with a new all-time high just above. I expect LINK to see new highs soon but many will keep watching in disbelief.

Chainlink LINK

The analyst did not hide his enthusiasm for LINK, and his predictions did not fall short of expectations regarding the performance of the cryptocurrency. After LINK exceeded the market capitalization of Bitcoin Cash, Rager even explained that LINK will displace Tether and take the place of XRP as the third largest cryptocurrency.

Reasons behind Chainlink’s rally

One of the main reasons behind Chainlink rally, according to Messari, is the establishment and consolidation of partnerships. In 2020, Chainlink has announced around 112 new partnerships. As can be seen in the graph below, there is a direct correlation between the number of Chainlink partnerships and LINK’s price.

Chainlink LINK


Messari researcher Wilson Withiam said LINK has seen a 628% increase in a year to date period. He attributed the increase in price to the “execution of an aggressive strategy of mass partnerships”. However, the Messari researcher also noted that Chainlink has done more than just make announcements; the platform has managed to show tangible results:

Over 30 projects have fully integrated Chainlink data feeds, most of which went live within the last month. Chainlink has quickly become the de facto choice for DeFi platforms and applications looking to outsource their oracle needs.

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In that sense, the growth of the DeFi sector has also been an important factor behind Chainlink’s rally. In the last two months, the Total Assigned Value (TVL) in the Ethereum DeFi sector has reached new historical highs constantly. It currently stands at $4.7 billion and, as shown below, has been rising steadily since mid-June.

Chainlink LINK

The growth of Ethereum’s DeFi sector is driven by yield farming, a method that investors use to take advantage of a number of protocols to achieve higher returns. Some platforms such as Compound (COMP), Aave (LEND), (YFI), among others, have recently launched governance tokens with high returns. Some DeFi protocols, such as Aave are using Chainlink’s oracle technology, allowing Chainlink to benefit from the success of these protocols.

Analyst predicts LINK price at $32

One analyst who also shares the hype about LINK is Timothy Peterson. The expert recently shared a bullish prediction for LINK via Twitter and stated that he expects the LINK rally to continue. Peterson commented that LINK could reach $32 before the end of the year:

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Did some quick analysis of Chainlink‘s network growth rate and historical deviations in price put LINK at $32 by end of year. Investors who buy at high levels risk losing 50% of their investment or more. Most growth priced in already.

However, it remains to be seen whether Peterson’s prediction will come true. In the short term, it is impossible to predict how high the price LINK will reach if the rally is extended, as it seems. However, Ethereum’s DeFi sector is gradually being described as a “bubble” that is not sustainable in the long run. Even the inventor of Ethereum, Vitalik Buterin, has expressed concerns about the sustainability of current profits in this sector.

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About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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