Chainlink’s (LINK) token experienced a stunning 26% surge between November 2 and 8, taking it to nearly $14, its highest level since April 2022. This solidifies its position as the tenth largest cryptocurrency by market capitalization (excluding stablecoins).
While the price action is welcomed by traders, is Chainlink’s current valuation of $8.1 billion justified? Cointelegraph research shows that the impressive price surge is driven by anticipation of the tokenization of real-world assets (RWA) and early signs of institutional adoption. However, let’s take a deeper look at the sustainability of the current rally.
Spot Bitcoin ETF expectations and tokenization of real-world assets boost market sentiment
Bloomberg’s ETF strategists James Seyffart and Eric Balhunas released a research report on November 8 that boosted confidence among cryptocurrency traders.
New research notes I wrote today.We still believe there is a 90% chance of getting spot before January 10th #bitcoin ETF Approved.But if it comes sooner, we’ll be entering a window where there *might* be a wave of approval orders for all current applicants pic.twitter.com/u6dBva1ytD
— James Seyff (@JSeyff) November 8, 2023
They explained in the report that the window for approving a Bitcoin spot exchange-traded fund will open on November 9 as the SEC ends its latest round of delays.
Seyffart maintained a 90% chance of approval but warned regulators’ final decision could be delayed until mid-January.
Altcoin prices have also risen significantly in the past seven days, with Trust Wallet Token (TWT) surging 41%, Immutable X (IMX) up 29%, and NEO up 28%. LINK’s appreciation shows positive sentiment towards altcoins, especially after Bitcoin (BTC) apparently stalled near the $35,500 mark.
Several positive developments within the Chainlink ecosystem have contributed to LINK’s recent performance.
On November 7, Vodafone, a major telecommunications company in Europe and North Africa, officially roll out It has partnered with Japanese financial group Sumitomo Corporation to use Chainlink oracles to facilitate transactions and provide a variety of applications, including electric vehicle charging stations and toll roads.
The digital platform, called Pairpoint, enables vehicles and devices to interact and transact autonomously in the emerging Internet of Things (IoT) space. Pairpoint leverages Vodafone’s existing digital asset platform and is fully integrated with partners such as Mastercard, HSBC, Deloitte and IBM.
Beyond IoT, broader trends appear to favor Chainlink’s oracle solutions.HSBC proves RWA tokenization is about to go mainstream emission Launched regulated securities custody services on November 8.
HSBC’s Zhu Kuang Lee has noticed increasing demand from asset managers and owners for digital asset custody and fund management. HSBC’s press release indicates that the custody service will complement its HSBC Orion platform for the issuance of digital assets and its recently launched tokenized gold product. It is also worth mentioning that HSBC manages approximately US$3 trillion in assets globally.
Increased demand for LINK token among professional traders
Despite the bright future, traders are questioning whether Chainlink will have the massive institutional inflows to support a 26% gain in just six days. Unfortunately, there’s no foolproof metric by which to measure this, but Grayscale’s Chainlink Trust (GLNK) offers an optimistic view despite having a relatively small $3.9 million in assets under management.
This over-the-counter instrument is traded through regular stock market brokers, making it accessible to asset managers who are unable to directly invest in cryptocurrencies. Notably, GLNK is trading at a 320% premium compared to the fund’s LINK token holdings, indicating strong buying demand.
Chainlink’s phenomenal growth is further fueled by LINK’s listing on HashKey Exchange, a licensed trading platform for professional investors in Hong Kong. Although the exchange was launched in August 2023, it is part of the same group behind the famous digital asset venture capital firm HashKey Capital, which was established in 2015.
Related: HSBC launches security token custody service using Ripple’s Metaco
From an on-chain metrics perspective, Chainlink’s price surge is supported by increased network activity.
Notably, the most recent peak occurred on November 7, 2022, coinciding with issues at the now-defunct FTX exchange. Excluding this particular instance, Chainlink’s two-day average daily transaction volume currently stands at 7,700, which is the highest level since June 2021.
Despite some valid criticisms of Chainlink’s over-centralization, its oracle dominance remains unchallenged. Therefore, any tailwind in the RWA market could have a positive impact on the price of LINK, paving the way for further price increases above $14.
This article is for general information purposes only and is not intended to be, and should not be construed as, legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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