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Chainlink new dollar ATH but poor vs BTC and HIGHLY centralized

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@julianhorack
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Today I take a closer look at the much loved new kid on the blockchain, namely Chainlink LINK, which is busy taking the crypto world by storm. Having just reached a new ATH in dollar value this week, and taken 8th spot in global market cap from veteran Bitcoin Cash BCH, it looks like LINK is on its way to the moon. LINK launched as an ICO in 2017 already, and runs on the Ethereum network. Coincidentally both LINK and ETH are founded by Russians – if we consider Vitalik Buterin as Russian. They certainly have a brilliant use case and this is crucial for any project to be of any value in the long term. Basically LINK acts as an oracle or bridge between normal world data and the blockchain world of smart contracts. It allows them to synchronize, which is great for onboarding the mainstream world into blockchain technology.

Then there is the LINK token itself, which is the currency with which the Chainlink node operators are paid. Staking is also required by the node operators, so there is a long term investment value in the staked tokens.

Amazingly there are some other new tokens also involved in the Chainlink ecosystem, namely Aave, Synthetix and Yearn.Finance YFI. These coins are pumping in their own right now as this little ecosystem of tokens gets mass attention. Even Google has partnered with Chainlink, and a huge brand name like that on board is a sure sign of optimism, regardless of what you think of Google practices personally. So the fundamentals are impressive, and that’s why the LINK token is pumping like crazy.

With a market cap of $9.3 billion, just below Cardano ADA, LINK has just today made its new ATH, breaking the previous all time high price of $20, set in mid August 2020, by 24% in the past two days, to stand at just over $25 as I write this. The daily candle has not closed yet and price is still climbing.

In fact in the past week or so, price has been making wild 40% swings, up and down like a whipsaw. Volatility is extreme right now. This coin is on fire. However, despite the ATH in dollar value, we must take notice of the BTC value, which has not held up quite as well. So it’s not all moonshots for LINK. It depends... If you bought your LINK with USD or a stablecoin, then you are obviously up in profit. But if you bought your LINK with your BTC, then you may actually be at a loss right now.

Unless you bought before mid November last year, in the past two months, your BTC value has dropped and you would have done better to just hodl BTC, rather than buy LINK with it. If we look at the chart we can see price making a new ATH but if you look at the orange line which is dipping, you can see the overall BTC value. Only in the past two weeks has it found support and begun to climb again, perhaps as BTC is consolidating now.

So it is a mixed bag with LINK and you can’t just take it at dollar value. In fact, with a LINK/BTC value sitting at 0.00078 BTC, the token actually needs to still double in BTC value to reach its past ATH at around 0.0016 BTC. Fortunately the BTC value is climbing again this year, as it is with numerous of the new altcoins pumping on the market now.

Another major red flag for me is the massively centralized ownership of LINK. According to Glassnode, the top blockchain analytics firm, more than 80% of all LINK tokens are held in just 1% of the wallets. In other words the top 150 whale investors and probably the company owners, hodl over 80% of all 402 million coins in circulation. This reminds me a bit of XRP Ripple and does not look good to me at all.

It’s not a reassuring sign when such centralized powers are potentially able to move the market with just a few whale wallets. They could sell or dump onto the market at any time, crashing the price. Look at the stats – 80% of tokens held by 1% of wallets. I don’t like it at all. Of course, this is just my opinion and not financial advice. There are bullish reasons to invest in LINK fundamentally. TA shows that the price is pumping and is indeed a bullish investment. But there are bearish indicators too, as I mentioned.

So if you want to invest in LINK, I would consider your ethical requirements for a cryptocurrency as a whole regarding decentralization, security, etc. I would then wait for a pullback form the current ATH. Price has support levels all the way down, on the even numbers, like $18, $16, etc where you could place buy orders if and when price retraces.

As I write this price is pumping to new ATHs by the minute, with no idea where it will land. The LINK Marines, as the hodlers are affectionately called, must be over the moon right now. I just hope that their faith in their commanding officers – all 125 of them – is justified, and that those 1%ers that own 80% of all LINK, are reliable and honest players. We have seen enough market manipulation, pump and dump, etc to know that centralized ownership is not ideal in cryptocurrency.

Further TA indicators, like the RSI on the daily chart, show bearish divergence, as price makes a higher high but RSI makes a lower high. So we are probably in for a correction after these massive green candles yesterday and today. Price could return to support at $18, which is the 21 EMA on the daily chart, which had been solid support in this recent uptrend all month so far.

Reference

Posted Using LeoFinance Beta