ChainLink, an Oracle to Rule Them All

Alala Chainlink, a cryptocurrency maintained in the top 20 for some time. But why is this the case? Why are oracles so important? Today, I’ll give you a brief introduction to their usefulness before looking at Chainlink’s price structure!

Warning : This article does not constitute investment advice or an investment inducement. It is intended for informational purposes only. You are the only one responsible for the trading and investment decisions you make.

Chainlink, an oracle?

Chainlink, launched in 2017, and its cryptocurrency, $LINK, aim to solve the problem of interoperability in the blockchain world. How? Chainlink is a decentralized protocol that connects smart contracts on the blockchain with off-blockchain data sources, such as financial, weather, and other types of data. This is called an oracle.

This uses a system of “nodes” that retrieve data from external sources and pass it to the blockchain’s smart contracts. The nodes are paid using thea LINK cryptocurrency, which is used as a means of payment on the network. So it’s essentially a network operation and reward cryptocurrency.

Now let’s move on to tokenomics, as of May 03, 2023, according to CoinMarketCap :

• Number of Tokens in circulation : 517 099 970
• Maximum number of tokens expected: 1 000 000 000
• % in circulation: 52 %

A limited supply with about half released since its debut, it would seem that Link still has a long way to go.

Where are we now?

Even though oracles will probably be the nuggets of tomorrow given the interest in selling data these days, that doesn’t necessarily mean that Link will succeed. Let’s analyze its chart together:

What a beautiful chart, isn’t it? In fact, it is even beautiful. Why? Simply because it has come to rest on a very interesting price zone ($6,385 highlighted in yellow on the right). This price is the old high before the previous bull run took off which also corresponds to the 0.886 Fibonacci retracement which is VERY often the nugget stop on altcoins.

So far not missed, it is well bought back massively on this price zone, the question is: will it hold? When we know that Bitcoin and some altcoins have already made beautiful rebounds!

What’s next?

Just like XRP (which I told you about in my article two weeks ago), LINK is a Bullrun heralding cryptocurrency. It usually takes off before the others. And so far, it’s been pretty lackluster! The good news is that its support is holding up very well to selling pressure.

The point of concern is the momentum which, despite a rise, does not exceed 50 for the RSI, a sign of some buying weakness. Buyers are therefore strong enough to take over sellers, but not to overwhelm them. Equality then!

What is certain is that the next move should be strong! How do I know that? By looking at the volatility indicators of course!

I present you 3 of them here:

1. The Bollinger Bands that are contracting (these are the blue bands above and below the price). The contraction of this indicates a decrease in volatility. Now, a market goes from high volatility to low volatility, so you know the rest!
2. Next, the volatility index 1st chart under the LINK chart. We can see a return to the bottom with a nice green color, meaning that the volatility is at its lowest for several weeks!
3. And FINALLY, one of my favorites. The CHOP, which when the right is above 60 (as here) announces an impulsive movement soon! And when you know that we are in weekly scale, it promises for the strength of the movement.

So we know that an impulsive movement is coming, but can we predict the direction? NO! No one can, it is true that we are sure of very low levels, but we can always go lower! As the support could still hold to propel the price upwards.

We need to be prepared for all eventualities. A drop? In this case, LINK’s next support is at $1.5… That’s a drop of 87%. It would hurt, but if LINK took a big hit, you now know where it could stop.

On the other hand, a rise could feel good too! The next resistance areas are at $15, $20 and $40 – price areas that are, basically, attainable! This would be a nice performance, although a realistic performance in the middle of a bullrun would be to see the LINK back in the top 10 and thus have an estimated MCAP (I assume the current top 10 will do x10 in MCAP) of $80 billion, soite a price with the current LINK supply of $150. So which side are you on? (This number may decrease depending on the total supply of the token at the time of the next bullrun)

Conclusion

We are dealing with a beautiful oracle whose currency LINK is in an ideal long-term zone, as it has not yet made a bullish move unlike some. Be careful though, because if Bitcoin were to fall again, it could drag Chainlink into the depths and we are not safe from anything in this ecosystem!

On the other hand, if LINK were to survive and another bullrun were to occur, then the buy point would be considered professional from a charting standpoint, even if the trend hasn’t started yet! I hope you enjoyed this article, see you soon for more analysis!