DeFi comeback? What’s in store for Chainlink?
Chainlink is one of the top DeFi projects in the crypto-verse which keen investors are very familiar with after its rapid ascent in 2020. Since topping out at US$20 in mid of August, prices came all the way down to US$7.25. But since mid of September a steady new uptrend seems to be in place. What’s in store for Chainlink?
What is Chainlink?
Briefly, the protocol transmits information in and out of a blockchain in a secure and decentralized manner by using ‘oracles’ to power the data transmission. The smart contract program consists of a network of nodes that provide information to and from the blockchain, creating a ‘blockchain middleware’ solution which has proven to be useful for broader smart-contract infrastructure.
Basically, Chainlink oracles provide essential information such as price feeds, event results, and links to traditional payment systems without undermining decentralisation or security, which speaks to the protocol’s assigned value.
You can find out more about the project in the whitepaper, available here.
Link has been in a corrective move since its peak in late August. After the initial sell off to US$9.2, Link attempted a comeback but ultimately failed to break resistance at US$12.8. Since then, the daily chart has depicted a series of attempts to correct further, each with weakening momentum, higher lows and higher highs.
In fact, Link’s corrective moves were -44%, -25%, -18% respectively before it hit the pivotal US$12.8 resistance level once again. Here, the token still did not have enough impetus to push through and was clearly rejected, dropping 21% in 22 days.
Assuming that this last sell-off was a one off and sell-side pressure continues to decrease, a $15 link is a reasonable price-target for the crypto if $12.8 is decisively reclaimed.
Per the above chart, the US$15 price-target acted as a clear lower-time-frame pivot on the 4-hour chart, suggesting a high probability for it to be tagged in the event that bullish momentum takes over. From current prices (US$11.6), this would represent a 26% profit margin.
Of course, there is no light without dark, so this bullish opportunity does not come without caveats. hence, if Link fails to reclaim the high-timeframe pivot, then a secondary macro correction could take the crypto to US$5, which would represent a full retracement very similar to bitcoin’s price-movements in the 2017 bull run.
Depending on investor preference, the US$12.8 pivotal level provides both long and short opportunities for the DeFi token. Of course, Link marines and holders will be happy campers if the crypto reclaims this level as it opens up the door to fresh all-time highs. But given its monumental 1,380% increase since the start of the year, tempering expectations is not unreasonable.
Conclusion – What’s in store for Chainlink?
All in all, this analysis is largely predicated on two factors:
- Weakening sell-side pressure
- The $12.8 pivot which will act as high time-frame support or resistance relative to price-action
Given that Chainlink is one of the major DeFi coins on the market, it’s unlikely for this cryptocurrency to go to zero unless one is convinced that there is no value in the space. In this case, it’s ill-advised to touch anything related to Defi.
Onward Link marines!
We post real time entries and exits for Bitcoin and crypto-assets in our free Telegram channel.
If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can subscribe to our free newsletter.