Chainlink (LINK) focuses on connecting blockchain smart contracts with external data
Chainlink is a decentralized oracle network designed to bridge the gap between blockchain smart contracts and real-world data, events, and APIs (Application Programming Interfaces).
It’s important to note that smart contracts alone cannot access external data. This is where Chainlink steps in. Chainlink enables smart contracts to connect with off-chain data sources, web APIs, and other external resources via its decentralized oracle network.
Chainlink operates within a flexible framework, capable of retrieving data from any API. Oracles within the Chainlink network are incentivized to provide accurate data, with each node operator assigned a reputation score. LINK tokens are utilized within the Chainlink ecosystem, and operators stake LINK as collateral to participate. They earn rewards for accurate data provision, and users pay LINK as fees for using the oracle services.
The growing popularity of Chainlink is evident, as it is employed across various sectors, including decentralized finance (DeFi), insurance, supply chain management, and gaming. By bringing external data to the blockchain, Chainlink facilitates the creation of more intricate and diverse smart contracts.
On August 31, SWIFT, a global payments platform, revealed the results of transactional tests utilizing Chainlink’s infrastructure to transfer tokenized values across both public and private blockchains. This test involved major financial institutions such as CitiBank.
Whale activity surrounding Chainlink (LINK) after Swift’s update
On-chain data reveals that Chainlink whales responded positively to this latest development. According to Santiment, crypto whales holding between 100,000 to 1 million LINK tokens had accumulated only 188 million tokens by August 30. However, after SWIFT’s positive tokenization test results were announced, these whales added another 2 million LINK tokens to their holdings.
The timing of this buying activity suggests that the update from SWIFT has boosted whale confidence in Chainlink’s potential role in facilitating large-scale collaboration between decentralized finance (DeFi) and traditional financial (TradFi) institutions. The newly acquired 2 million LINK tokens, worth around $12 million at current prices, could signal higher liquidity in the market, which may lead to an upward price movement for LINK if this trend continues.
While the increased whale participation and adoption are positive signs for LINK, it’s crucial to remember that LINK remains a volatile asset, and the broader cryptocurrency market dynamics play a significant role in its price movement. Additionally, concerns about a global recession and central bank monetary policies will continue to impact the crypto market in the coming weeks.
Chainlink (LINK) technical analysis
Following a peak above $8 in July 2023, Chainlink (LINK) has seen a decline of more than 20%. The price is currently stabilizing around the $6 support level, but a drop below this mark could trigger a test of the $5 support level. Some analysts suggest that more investors may step in to buy LINK in the coming weeks, but as long as the price stays below $7, LINK remains in the “SELL-ZONE.”
Belangrijke ondersteunings- en weerstandsniveaus voor Chainlink (LINK)
In this chart, marking the period from January 2023, we observe the key support and resistance levels that can assist traders in predicting potential price movements. The strength of a support or resistance level grows the more frequently the price tests it without breaking through.
Once a resistance level is surpassed, it can turn into support. Currently, Chainlink (LINK) is in a bearish trend. However, if the price surpasses $7, this could signal a trend reversal, with the next target around $8. The crucial support level to watch is $6. A break below this level would trigger a “SELL” signal, and the next target would be near $5.5. Should the price fall below $5 (a strong support level), the next potential target would be around $4.
Factors supporting a rise in the Chainlink (LINK) price
Chainlink (LINK) is currently in a bearish phase, but it’s worth noting that the volume of LINK traded has recently increased. Santiment data shows that whales holding between 100,000 to 1 million LINK tokens added 2 million LINK tokens on August 31, 2023.
These 2 million new tokens are valued at approximately $12 million, and if this whale buying spree continues, it could lead to higher liquidity in the market, which could help push the price of LINK higher.
As Chainlink’s price is often correlated with Bitcoin’s performance, a potential rebound in Bitcoin’s price above the $28,000 support could positively influence the price of LINK as well.
Factors pointing to a potential decline in Chainlink (LINK)
Chainlink (LINK) remains unpredictable and is a highly risky investment, so investors should proceed with caution. The macroeconomic environment is still uncertain, reflecting policy tightening by central banks to combat high inflation, worsened financial conditions, and ongoing geopolitical disruptions like Russia’s invasion of Ukraine.
Although Chainlink (LINK) is holding above the $6 support level, a drop below this threshold could indicate a test of the $5 support level. As LINK’s price is often linked to Bitcoin’s price, any decline in Bitcoin could negatively affect LINK’s value.
What analysts and experts predict
September is historically a weaker month for stocks and riskier assets, with a market anomaly called the September Effect, where investment returns tend to be lower. Chainlink (LINK) is under pressure after Bitcoin dropped below $26,000 amid global market risk aversion. However, Chainlink whales continue to show active interest in the token.
On August 31, SWIFT’s test results involving Chainlink infrastructure to facilitate tokenized transfers across multiple blockchains added positive momentum. Following this, on-chain data revealed that whales holding between 100,000 and 1 million LINK tokens have accumulated an additional 2 million LINK tokens, worth approximately $12 million.
If whale activity continues to increase, the price of LINK could break resistance at $8 and rise further. However, considering the extreme volatility in the cryptocurrency market, predicting the price of any token accurately is highly challenging. Experts also note that LINK’s price is closely tied to Bitcoin’s price. If Bitcoin drops below the $25,000 support level, LINK could experience new lows.
Disclaimer: Cryptocurrency investments are highly volatile and may not be suitable for all investors. Never invest money you cannot afford to lose. The content of this site is for educational purposes only and should not be taken as financial or investment advice.
