Chainlink LINK (LINK) saw a notable 26% surge between November 2 and 8, approaching $14, a level not seen since April 2022. This solidified its position as the 10th largest cryptocurrency (excluding stablecoins) by market capitalization. market.
While the price action is a welcome sight for traders, is Chainlink's current valuation of $8.1 billion justified? Cointelegraph research shows that the impressive price rise is driven by real-world asset (RWA) tokenization expectations and early signs of institutional adoption. However, let's dig deeper to assess the sustainability of the current rally.
Expectations of Bitcoin ETFs and Tokenization of Real-World Assets Boost Sentiment
Bloomberg exchange-traded fund (ETF) strategists James Seyffart and Eric Balhunas issued a research note on November 8 that has increased the confidence of cryptocurrency traders.
New research note from me today. We still believe there is a 90% chance for January 10 #Bitcoin ETF approvals. But if it comes sooner, we will enter a window where a wave of approval orders *MIGHT* occur for all current applicants. pic.twitter.com/u6dBva1ytD
-James Seyffart (@JSeyff) November 8, 2023
In their note, they explain that the window to approve a Bitcoin spot (btc) exchange-traded fund will open on Nov. 9 as the U.S. Securities and Exchange Commission concludes its latest round of deferrals.
Seyffart maintains a 90% probability of approval, but warns that the regulator's final decision could be delayed until mid-January.
Altcoins have also seen notable price increases over the past seven days, with Trust Wallet Token (TWT) rising 41%, Immutable X's IMX (IMX) up 29%, and NEO up 28%. LINK's appreciation is indicative of the positive sentiment towards altcoins, particularly after Bitcoin's apparent stagnation around the $35,500 mark.
Within the Chainlink ecosystem, several positive developments have contributed to LINK's recent performance.
On November 7, Vodafone, a major telecommunications company based in Europe and North Africa, officially announced thrown out its partnership with Japanese financial conglomerate Sumitomo Corporation, using Chainlink oracles to facilitate transactions and offer various applications, including electric vehicle charging stations and toll roads.
This digital platform, known as Pairpoint, allows vehicles and devices to interact and negotiate autonomously in the emerging Internet of Things (IoT) landscape. Pairpoint leverages Vodafone's existing digital asset platform and has full integration with partners such as Mastercard, HSBC, Deloitte and IBM.
Aside from IoT, a broader trend seems to favor Chainlink's oracle solution. RWA tokenization is about to become mainstream, as demonstrated by the HSBC report. launch of regulated securities custody services on November 8.
HSBC's Zhu Kuang Lee has noted the growing demand for custody and management of digital asset funds from asset managers and owners. HSBC's press release indicates that the custody service will complement its HSBC Orion platform for the issuance of digital assets and a recently introduced tokenized gold offering. It is also worth mentioning that HSBC manages approximately $3 trillion in assets globally.
Increased demand for LINK tokens from professional traders
Despite the promising future outlook, traders are wondering if there have been substantial institutional inflows into Chainlink to support the 26% rally in just six days. Unfortunately, there is no foolproof metric to measure this, but Grayscale's Chainlink Trust (GLNK) presents a bullish outlook, despite its relatively modest $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 cannot invest directly in cryptocurrencies. Notably, GLNK price is trading at a 320% premium to the fund's underlying LINK proportionate holdings, indicating strong buying demand.
Further driving Chainlink's impressive gains is LINK's listing on the HashKey exchange, a licensed trading platform serving professional investors in Hong Kong. Although it launched in August 2023, the exchange is affiliated with the same group behind HashKey Capital, a prominent digital asset venture investment firm founded in 2015.
Related: HSBC Taps Ripple's Metaco to Launch Security Token Custody
From an on-chain metrics perspective, Chainlink's price increase is supported by increased network activity.
Notably, the most recent peak occurred on November 7, 2022. coinciding with problems on the now defunct FTX exchange. Excluding this specific case, Chainlink's current two-day average of 7,700 daily transactions is the highest since June 2021.
While some valid criticisms have been raised on Chainlink's excessive centralization, his mastery of the oracle remains undisputed. Consequently, any tailwind for the RWA market should likely have a positive impact on LINK price, paving the way for further price rises above $14.
This article is for general information purposes and is not intended to be and should not be taken 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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