Between November 2 and November 8, Chainlink’s LINK token experienced an impressive surge of 26%, reaching nearly $14. This marked the highest level the token had reached since April 2022 and solidified its status as the 10th largest cryptocurrency (excluding stablecoins) by market capitalization, with a valuation of $8.1 billion.
While this price surge is undoubtedly a cause for celebration among traders, it prompts questions about whether Chainlink’s current valuation is justified. Research conducted by Cointelegraph indicates that the surge was driven by growing expectations of real-world asset (RWA) tokenization and initial signs of institutional adoption. However, to fully understand the sustainability of this rally, a deeper analysis is required.
The upward trajectory of Chainlink’s LINK token can be attributed to a number of factors. First, Bloomberg’s exchange-traded fund (ETF) strategists, James Seyffart and Eric Balhunas, revealed on November 8 that the potential approval of a spot Bitcoin (BTC) ETF has contributed to positive sentiment among cryptocurrency traders. This information has boosted confidence among traders, leading to increased demand for altcoins, as evidenced by notable 7-day price increases in other coins such as Trust Wallet Token (TWT), Immutable X’s IMX (IMX), and NEO.
Furthermore, within Chainlink’s ecosystem, several key developments have played a role in the token’s recent performance. One such development was the official launch of a partnership between Vodafone, a prominent European and North Africa-based telecom company, and Japanese financial conglomerate Sumitomo Corporation. This partnership utilizes Chainlink oracles to facilitate transactions and offer diverse applications, such as electric vehicle charging stations and toll roads, through a digital platform known as Pairpoint. This platform has full integration with partners such as Mastercard, HSBC, Deloitte, and IBM, enabling vehicles and devices to autonomously interact and trade in the emerging Internet of Things (IoT) landscape.
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Additionally, the broader trend of RWA tokenization is clearly becoming mainstream, as demonstrated by HSBC’s recent launch of custody services for regulated securities. The increasing demand for custody and fund administration of digital assets from asset managers and owners, as noted by HSBC, further highlights the positive outlook for Chainlink’s oracle solution.
Professional traders have also shown increased demand for LINK tokens. Grayscale’s Chainlink Trust (GLNK), despite having relatively modest assets under management of $3.9 million, presents an optimistic perspective. GLNK’s price is trading at a 320% premium compared to the proportional underlying LINK holdings held by the fund, indicating robust buying demand. Moreover, the listing of LINK on the HashKey exchange, a licensed trading platform for professional investors in Hong Kong, has provided further fuel to Chainlink’s impressive gains.
From an on-chain metrics perspective, Chainlink’s price surge is supported by increased network activity. Notably, the most recent peak in activity occurred on November 7, 2022, coinciding with issues at the now-defunct FTX exchange. However, excluding this specific instance, the current two-day average of 7,700 daily Chainlink transactions is the highest since June 2021.
While valid criticisms have been raised about Chainlink’s excessive centralization, its oracle dominance remains unchallenged. Therefore, any tailwind for the RWA market is likely to have a positive impact on LINK’s price, paving the way for further price hikes above $14.
In conclusion, the recent surge in Chainlink’s LINK token price is backed by a combination of factors, including expectations of a Bitcoin ETF approval, real-world asset tokenization, institutional adoption, and positive developments within Chainlink’s ecosystem. As these factors continue to play out, the sustainability of the current rally appears promising, with the potential for continued growth in the value of LINK tokens.
