Chainlink (LINK) has been performing exceptionally well since September, with a price surge of over 25%. This impressive performance has outpaced Bitcoin (BTC), Ethereum (ETH), and most other altcoins. Currently, Chainlink holds the top spot as the leading decentralized blockchain oracle solution and is ranked 15th in terms of market capitalization when excluding stablecoins.
However, in October, LINK faced a slight setback with a 10% correction in its month-to-date performance. This correction has raised concerns among investors who fear that breaking the $7.20 support level may lead to further downward pressure, potentially erasing all the gains made in the previous month.
It’s worth noting that even though LINK reached a closing price of $8.21 on September 30, marking its highest point in over 10 weeks, its price still remains 86% below its all-time high in May 2021. Additionally, over the past 12 months, LINK has shown minimal growth compared to Ethereum (ETH), which gained 21.5% in the same period.
One of the factors driving Chainlink’s bullish run was the report released by SWIFT, the leader in messaging for international financial transactions, titled “Connecting Blockchains: Overcoming Fragmentation in Tokenized Assets.” The report suggested that linking existing systems to blockchains is more feasible than unifying different central bank digital currencies (CBDC). This report boosted investor confidence in Chainlink and its role in providing a solution to bridge the gap between traditional systems and blockchain technology.
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Another significant development that contributed to Chainlink’s value surge was the successful testing of their Australian dollar stablecoin by the Australia and New Zealand Banking Group (ANZ). ANZ used Chainlink’s Cross-Chain Interoperability Protocol (CCIP) solution and described the transaction as a “milestone” moment for the bank. This successful test showcased the potential for tokenizing real-world assets, which has the power to revolutionize the banking industry.
On September 21, Chainlink announced the mainnet launch of the CCIP protocol on the Ethereum layer-2 protocol Arbitrum One. This integration enables cross-chain decentralized application development and provides access to Arbitrum’s high-throughput, low-cost scaling solution. The fact that other notable Ethereum scaling technology firms, such as StarkWare, have previously utilized Chainlink’s oracle services further adds to Chainlink’s credibility and market position.
However, amidst the positive news flow, Chainlink faced some criticism. On September 24, a user called out Chainlink on social media for quietly reducing the number of approvals required on its multi-signature wallet. This change, which reduced the required number of signatures from four out of nine to an undisclosed number, raised security concerns among investors. Chainlink responded by downplaying the concerns and stating that the update was part of a regular signer rotation process. Despite the response, some critics argue that if Chainlink’s signers were to ever “go rogue,” it could potentially jeopardize the entire decentralized finance (DeFi) ecosystem.
Furthermore, Chainlink’s protocol revenue, generated by its price feeds, has been on the decline for the past four months when measured in LINK terms. In September, Chainlink’s price feeds generated 142,216 LINK in fees, a 57% drop compared to May. While part of this drop can be attributed to the decline in Ethereum’s total value locked (TVL), which decreased by 29% from May to the current value, it raises questions about the sustainability of Chainlink’s revenue model.
Chainlink offers various services beyond price feed generation and operates on multiple chains. However, Ethereum’s oracle pricing services remain the core of the protocol’s business. Comparatively, Uniswap, the leading decentralized exchange, has a market capitalization of $2.38 billion, which is 42% lower than Chainlink’s. Uniswap also boasts $3 billion in total value locked (TVL) and generated $22.8 million in fees in September alone. These comparisons make some investors wonder if Chainlink can maintain its $7.20 support level and sustain its $4.1 billion market capitalization.
In conclusion, Chainlink’s recent performance has been impressive, with a price surge that outperformed major cryptocurrencies. The positive news flow, including collaborations with SWIFT and successful testing by ANZ, contributed to the bullish sentiment. However, concerns arise from the reduction in multisig approvals, declining protocol fees, and comparisons with other industry players like Uniswap. Whether Chainlink can maintain its support level and market capitalization remains to be seen, and investors will closely monitor its future developments and revenue generation.
