How Chainlink RWAs helped LINK soar 164% in 2023
- After a 164% hike, LINK could once again be the biggest beneficiary of the RWA narrative.
- Whales continue to show interest in the project.
Chainlink’s [LINK] performance in 2023 is one that AMBCrypto found difficult to overlook. For some, the bone of contention was the incredible surge in LINK’s value.
However, according to our analysis, the hype around the project is more than just the price action. That is also one of the reasons Chainlink is one of the projects participants are looking out for as the market heads into 2024.
When the year, Chainlink was not in a sorry state like most crypto projects, implying that the project did not sleep on development. This was evident in Sergey Nazarov’s statement on the 19th of January.
According to Nazarov, Chainlink’s plans for the year revolved around staking an adoption of its Oracle network. For context, Chainlink employs the Oracle network in connecting blockchains with off-chain data.
However, there was one area that the Chainlink co-founder touched on that has been the focus of a large part of the crypto market— and that is the tokenization of Real World Assets (RWAs).
This process involves the use of digital tokens to represent ownership and legal rights to a property on the blockchain.
Concerning the development, Nazarov noted that,
“Programmable assets can generate rewards, serve as collateral, integrate into play-to-earn games, support derivative products, and more. As the connection point between traditional systems and blockchain systems, Chainlink holds a key position in this tokenization mega-trend.”
Are Real-World Assets the new gold?
It is noteworthy to mention that Chainlink’s involvement in RWAs did not begin in 2023. However, the rise in adoption this year has been enormous. But the project did not do it alone.
The likes of Avalanche [AVAX] and Internet Computer [ICP] also contributed to the rise. That is also one of the reasons the market cap of the RWAs category has grown to $33.22 billion, according to CoinMarketCap.
Interestingly, AVAX, and ICP, alongside LINK have been tipped by analysts like Scott Melker to be some altcoins “destined” to benefit from the narrative in 2024.
WILL $LINK BE THE GREATEST BENEFICIARY FROM THE TOKENIZATION OF REAL WORLD ASSETS (RWA)?
K33 Research suggests that Chainlink's native token, LINK, is the "safest bet" for investors wanting to capitalize on the growing trend of real-world asset (RWA) tokenization. Tokenizing… pic.twitter.com/Xrfv4trxD6
— The Wolf Of All Streets (@scottmelker) October 11, 2023
As a result of this development, Chainlink’s Social Dominance has improved. AMBCrypto’s assessment of Santiment’s data showed that social dominance spiked on several occasions.
Social dominance measures the rate of discussion about a project compared to others in the market. At the time of writing, LINK’s social dominance had increased to 0.906%.
The hike is a testament to the attention Chainlink has received for most of the year.
Per price action, LINK’s value has increased by 171.66% in the last 365 days. Thus, investors who bought LINK when the year began would have made more gains than those who bought Bitcoin [BTC].
LINK plans to double its value
At press time, the price of LINK was $15.47. This value represented a 2.26% decrease compared to the 24-hour price when this article was written.
Despite the drawdown, there have been predictions by some analysts that LINK’s price could double in a few months.
The most notable analyst who has been “shilling” LINK is Michaël van de Poppe. Van de Poppe has been talking about LINK since the price was under $8.
On the 18th of December, van de Poppe, who is also the founder of MN Trading, posted that the cryptocurrency might hit $25 in the next three to six months.
In the post, he opined that the $14 region was only a consolidation phase for the token. So, it could also be a good entry for market participants looking to hold for the mid-term.
#Chainlink consolidates at $14, and doesn't even get close to a retest at $8.
Most likely, anything in the ball park of $11-14 is a good entry point, aiming for $25 in the next 3-6 months.
The upwards cycle has started and consolidation periods are entry points. pic.twitter.com/2iKEFOfX45
— Michaël van de Poppe (@CryptoMichNL) December 18, 2023
Per the price prediction, one area Chainlink investors can focus on is its correction with Bitcoin. According to Macroaxis, LINK has had a 0.94 correlation coefficient with BTC in the last 90 days. The correlation coefficient is a value ranging from -1 to +1.
Values close to zero imply that Bitcoin does not affect LINK’s direction. On the other hand, reading close to 1 suggests otherwise.
Though LINK is about 1.37 times more volatile than BTC, players who hold both cryptocurrencies tend to make gains around the same period on each.
Weak hands, but HODLing is an option
Going forward, it might be important to check Bitcoin’s movement when considering LINK. However, this is not to say that there are no times when the altcoin decouples from the number one cryptocurrency.
Hence, traders might need to watch as there were some situations like that in 2023. At press time, the H4 chart showed that the 20 EMA (blue) had flipped the 50 EMA (yellow). This is considered a bullish signal.
So, LINK may experience a prolonged uptrend in the coming weeks, and this potential hike could begin in January 2024. On the flip side, LINK may not test the previous peak in a few days.
This was because of the Relative Strength Index (RSI), At press time, the RSI reading was down to 52.24, indicating that buying momentum had become weak. If LINK fails to enter a high momentum, then the price may drop below $15.
However, if the Awesome Oscillator (AO) manages to rise above 0.025, then LINK’s momentum and direction could change for the better. This change, if it happens, could be the first step for the cryptocurrency to head in the $25 direction.
Again, watch out for whales and others
Furthermore, it is important to note that technical analysis is not the only key that might affect Chainlink’s price action. Establishing itself as the standard for tokenized assets on the blockchain would also play a key role.
This RWA narrative has also impacted the adoption of LINK. At several points, AMBCrypto reported how whales were accumulating the cryptocurrency in large numbers.
While it was uncertain which whales were involved, speculation went around that some traditional institutions adopting the Chainlink protocol were involved.
Should the accumulation continue in 2024, then LINK may again replicate the performance it has had all year long. For the time being, other aspects have also placed Chainlink as a relevant crypto project.
Read Chainlink’s [LINK] Price Prediction 2024-2025
Some of these include the Cross Chain Interoperability Protocol (CCIP) and the Proof of Reserves. The Proof of Reserves encourages transparency by allowing assets to cryptographically confirm reserves through the decentralized Oracle network.
On the other hand, the CCIP enables data and token transfer across chains. While both concepts seem important to the crypto ecosystem at large, time will tell if traction would come to Chainlink because of them.