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Chainlink and Swift Experiment Could Lead to LINK Breakout

By Coinpaper | Coinpaper | 1 Sep 2023


One recent development that has caught the attention of cryptocurrency industry observers over the past few days was the collaboration between Chainlink and Swift, a prominent financial messaging giant. This collaboration, which revolved around a tokenization experiment, not only highlighted the potential of blockchain-based tokenization but also underscored the critical role that Chainlink's technology played in achieving interoperability.

 

This latest development was, however, not able to impact the price of Chainlink’s native token (LINK) much. Despite this, technical indicators and chart patterns on LINK’s daily and 4-hour charts suggested that LINK’s price may breakout towards the upside in the coming few days.

 

SWIFT Turns Their Attention to Tokenization

Tokenization, the process of converting real-world assets into digital tokens on a blockchain, has been gaining traction as the next frontier in the financial ecosystem. It promises increased liquidity, fractional ownership, and enhanced transparency for a variety of assets, ranging from real estate to commodities. However, the journey towards widespread tokenization is not without its challenges, and one of the most significant obstacles is achieving interoperability between different blockchain networks.

 

Swift recognized the importance of addressing this challenge and embarked on a tokenization experiment that leveraged Chainlink's Cross-Chain Interoperability Protocol (CCIP). The outcome of the experiment was a testament to the potential of this collaboration, as Swift successfully utilized the CCIP to ensure secure interoperability between the networks involved in the tokenization trial.

Central to the success of the experiment was the utilization of Chainlink's Oracle solution as an abstraction layer. This layer enabled a secure and reliable connection between the Swift network and the Ethereum Sepolia network, showcasing that the existing Swift infrastructure could be adapted to connect partner financial institutions with various blockchain protocols relevant to their asset tokenization endeavors.

The significance of this collaboration extends beyond the experiment itself. Tokenization is on the brink of becoming a significant trend in the financial industry, and companies are actively positioning themselves to capitalize on this transformative shift. While the potential benefits are undeniable, challenges surrounding interoperability remain a significant concern. The need to ensure seamless communication and compatibility between diverse blockchain networks is essential to fostering confidence among early adopters.

The successful use of Chainlink's protocol and the CCIP  in Swift's experiment serves as a beacon of hope for addressing these interoperability challenges. The partnership demonstrates that established players in the financial industry are actively seeking solutions to these roadblocks, and that innovative technologies like Chainlink's can play a pivotal role in realizing this vision.

Furthermore, this collaboration signals a shift in the role of Chainlink within the blockchain ecosystem. Beyond serving as a data abstraction protocol, Chainlink's Oracle solution has now evolved to become a critical enabler of cross-chain interoperability. The experiment's success highlights Chainlink's capacity to bridge the gap between disparate blockchain networks, enhancing connectivity and facilitating the seamless exchange of assets and information.

From the perspective of Chainlink's native token, LINK, the collaboration with Swift holds immense potential. As major banks with vast global client bases express interest in participating in Swift-backed tokenization initiatives, the demand for LINK tokens is set to rise substantially. This demand stems from the token's crucial role in enabling secure and efficient transactions within the Swift-powered tokenization ecosystem. Consequently, LINK's value proposition receives a significant boost, potentially elevating it to new heights.

 

Price Overview

The positive development did not impact the price of LINK  much, as CoinStats indicated that the altcoin’s price had only risen 0.21% throughout the past 24 hours. Subsequently, the altcoin was changing hands at $5.97 at press time.

Price chart for LINK (Source: CoinStats)

 

Despite the positive daily performance, LINK’s performance over the past 7 days was still down, and stood at -0.75%. Nevertheless, the altcoin was able to outperform the market leader Bitcoin (BTC) during the past day of trading, and outshined the leading cryptocurrency by 4.96%. As a result, 1 LINK was worth 0.00022956 BTC.

Technical Overview

Daily chart for LINK/USDT (Source: TradingView)

 

From a technical perspective, a positive trend line had formed on LINK’s daily chart during the past 48 hours after the altcoin’s price printed a new higher low at $5.730 yesterday. After reaching this low point, LINK’s price had rebounded to trade at its current level. Moreover, the cryptocurrency’s price movement throughout the past 2 weeks resulted in the formation of a symmetrical triangle chart pattern as well. This suggested that a breakout in the short-term is imminent.

In the event of a bullish breakout, the altcoin’s price may attempt to challenge the $6.680 resistance and flip the price point into support within the following week. Continued buy pressure may also lead to LINK’s price rising to as high as $7.731 over the next couple of weeks. A potential early indication of the bullish breakout will be when LINK closes a daily candle above the $6.127 mark.

Conversely, a breakout towards the downside may lead to LINK’s price retesting the crucial support level at $5.350 in the upcoming week. Investors and traders will, however, want to wait for LINK’s price to break below the positive trend line that had established on its daily chart before entering into a short position for LINK.

The bullish thesis may be more likely to play out than the bearish thesis given the fact that a significant bullish technical flag was on the verge of being triggered. At press time, the MACD line on LINK’s daily chart was attempting to cross above the MACD Signal line. Should these two lines cross, it will signal that LINK’s short-term trend was shifting from negative to positive. Subsequently, the cryptocurrency’s price may rise in the following few days.

Adding credence to the bullish thesis is the fact that the daily RSI was in oversold territory as well at press time. The daily RSI almost crossed bearishly below the RSI SMA line over the past 48 hours, but buyers stepped in at the right time to prevent this bearish technical flag from being triggered.

 

4-hour chart for LINK/USDT (Source: TradingView)

 

The shorter timeframes supported the bullish outlook for LINK at press time. Despite a negative price channel being present on the 4-hour chart for LINK/USDT, the RSI line on the 4-hour chart had recently crossed above the RSI SMA line. Furthermore, the MACD line on the 4-hour chart was attempting to cross above the MACD Signal line, similar to the daily chart for the altcoin.

If LINK’s price is able to close 2 consecutive 4-hour candles above the $6.127 resistance, then it would have broken out of the negative price channel. As a result, the cryptocurrency’s price may begin its ascent towards $7.731. On the other hand, LINK breaking below the lower level of the negative price channel on the 4-hour chart will invalidate the bullish thesis. In this scenario, LINK may drop towards the $5.350 support level.

 

Disclaimer: Coinpaper does not recommend that any cryptocurrency should be bought, sold, or held by you. Always conduct your own research and consult your financial advisor before investing in any digital asset.

 

Read the full article on Coinpaper.

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