3 Reasons Why Chainlink (LINK) Could Rally Monstrously in 2023?

Key Takeaways:

  • Chainlink price flatlines.
  • Whale accumulation is on the rise, despite overall bearish sentiment among retail investors.
  • Chainlink Web3 Functions promise to boost the LINK demand.
  • Is LINK in a Wyckoff setup?
Chainlink, 3 Reasons Why Chainlink (LINK) Could Rally Monstrously in 2023?

YEREVAN (CoinChapter.com) – LINK, the in-house token of Chainlink Oracle Network, has fluctuated between $5.50 and $8.50 since May 2022, driven by threats of recession and its impact on the broader crypto market.

Chainlink (LINK) daily price action chart. Source: TradingView.com
Chainlink (LINK) daily price action chart. Source: TradingView.com

However, LINK may break out of the range to the upside in 2023 due to these three reasons

1. Proof of Reserve

Blockchain co-founder Sergey Nazarov outlined the utility of Chainlink’s consensus mechanism in the current economic climate in the roadmap, published Jan. 2023.

In detail, the proof of reserve (PoR) is a consensus that “verifies digital asset collateralization held by crypto businesses, helping bring greater transparency to depositors via public attestations and independent audits.” In other words, it claims to offer highly transparent, trust-minimized financial products powered by deterministic smart contracts and “cryptographic truth.”

Chainlink ecosystem grows despite the market downturn

Nazarov reiterated the broader demand for PoR after 2022, which was disastrous for crypto. Also, he stated that the financial world has become less predictable due to the global economic crisis and rampant inflation. Thus, users can no longer rely on “unverifiable trust,” meaning centralized exchanges.

“I strongly believe […] the demand for the cryptographic truth/guarantees generated by Chainlink will continually increase,” said Nazarov, citing Chainlink’s growing adoption.

Chainlink adoption grew despite market downturn. Source: blog.chain.link
Chainlink adoption grew despite the market downturn. Source: blog. chain.link

Among other statistics presented in the infographic above, developer adoption and activity grew, which could indicate long-term success.

A growing number of GitHub repositories reference one or more Chainlink services. Chainlink hackathons have played a significant role in onboarding and accelerating the progress of Web3 developers, bringing in tens of thousands of registrants in 2022. 

read the report.

Also read: EU Pledges Nearly $20B to Fill Ukraine’s Budget Deficit Amid Raging War.

2. LINK whale accumulation rising in Q2

According to on-chain data, LINK whales, i.e., accounts holding between 100,000 and 10 million tokens, have accumulated the undervalued asset since late Q1, 2023. So have the accounts holding from 10,000 to 1 million coins, which could facilitate a price appreciation in the current quarter.

LINK whales on the move. Source :Santiment. com
LINK whales are on the move. Source: Santiment.net

According to blockchain tracking service Lookonchain, 30 addresses, potentially the same individual, have accumulated 2.6 million LINK tokens worth over $18.5 million from the crypto exchange Binance in March 2023.

Retail investors oppose whales, but the charts remain bullish

Conversely, the retail investor sentiment toward the altcoin remained bearish, as seen in the chart below. Typically, when a large percentage of the community is bearish, whales tend to take a contrarian or bullish stance and accumulate an altcoin at a discount price, which, in turn, drives the price appreciation.

Market sentiment towards LINK remained bearish. Source: Santiment.net
Market sentiment towards LINK remained bearish. Source: Santiment.net

A rally is not a given in the current economic climate. However, the whale accumulation indicates high expectations from large holders, a bullish sign for any blockchain.

Also read: Bitcoin Price Holds Magical Support at 50-day SMA, Time To Rally?

3. Web 3 could boost LINK demand

According to a Web3 report from the crypto analytical platform Messari, the market downturn in 2022 hit the Web3 sector hard. As a result, the latter lacked funding and development. However, Messari researcher believes that Chainlink functions could prove instrumental in redeeming the sector.

In short, Web3 Functions allow smart contracts to execute traditional code like JavaScript, allowing them to perform familiar Web2 execution like calling an API and executing code on the returned data. Meanwhile, Chainlink’s version of those Functions operates on a “request and receive model.”

The latter means users and applications ping requests for the data each time they want to use it and run the request through the Decentralized Oracle Network (DON). DON saves costs for the node operators, lowers network congestion, and decreases end-user latency.

DON could push Chainlink demand

Messari noted that they could not accurately forecast what kind of LINK demand the DON may generate. However, researchers said the following:

That said, we do know that Web2 Functions providers run billions, if not trillions of functions per month. Assuming comparable costs to Web2, Chainlink Functions would start to see material marginal demand for LINK once it reaches the hundreds of billions of function calls per year.

asserted the Messari report.
Demand for LINK could accelerate Web3. Source Messari.io
Demand for LINK could accelerate Web3. Source Messari.io
Also read: Home Depot's $1B Salary Increase Boosts Minimum Wage Debate for US Employees.

Bonus 4: Is LINK in Wyckoff setup?

A crypto analyst believes LINK’s indecisive price action in the previous year could be a part of the Wyckoff setup.

This technical indicator points to a potential bullish reversal after strong downtrends. It features four consecutive phases: accumulation (supposedly where LINK is now), markup, distribution, and markdown.

LINKUSDT has been in a typical Wyckoff Method consolidation phase. Looking at previous fractals, we see that Chainlink often goes parabolic during the months of June/July. Even should it not happen that way this time around, LINKUSDT has established a clear bottom and will most likely only go upwards.

commented the analyst, providing a chart to back their claim.
LINK in a Wyckoff setup, says analyst. Source: TradingView.com
LINK in a Wyckoff setup, says the analyst. Source: TradingView.com

Additionally, on-chain predictors put a BUY label on LINK, with a fear/greed oscillator at 60. The latter means potential investors would rather accumulate than miss out on the opportunity to buy a discount token.

Also read: Hilarious! Russian pranksters, posing as Ukraine President Volodymyr Zelensky, dupe Fed Chairman Jerome Powell. 

Despite recession fears, the above factors could propel the LINK coin in the current year.

Whale accumulation and heightened demand from developers are bullish signs for the altcoin. Additionally, given the growing adoption despite the market downturn and the advantages of PoR consensus, Chainlink could constitute a profitable long-term investment.

Chainlink, 3 Reasons Why Chainlink (LINK) Could Rally Monstrously in 2023?

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