Chainlink is probably one of the most successful projects, in terms of price action, as it is one of the only cryptocurrencies that are ranked in the top 20 and has created a fresh all-time high price in 2019 (the other coin being Binance Coin). Yes, Chainlink actually managed to create a fresh ATH, something which the majoirty of cryptocurrency projects are miles away from achieving.
The market was very quiet during the first few months of the year as the market largely traded underneath the $0.50 level. This all started to change during May as the cryptocurrency started its journey in surging higher. Throughout May and June, LINK had managed to surge by a total of 900% to reach the fresh all-time high price of $4.50 toward the end of June 2019. Although this is a SIGNIFICANT price increase, after reaching the resistance at $4.50, LINK went on to drop by a total of 65% over the following months until strong support was found at $1.50 in September, allowing the market to rebound higher to the current trading price of $2.61 (as of October 21st, 2019).
The 900% price surge was largely attributed to the fact that Chainlink was successfully integrated into the Ethereum blockchain, bringing the Chainlink product to life! Despite the recent success, I believe that during 2020 Chainlink will have even more success. The integration to Ethereum is just a starting point and the team has further planned to become blockchain agnostic - further increasing their use-case. As of today, Chainlink continues to hold the highest ROI for a large market cap project. It also has a very strong track record that shows the size of the network is increasing exponentially. If this exponential increase can continue into 2020, I believe LINK has a VERY STRONG potential to surge by a total of 185%, from the current price, to reach my target of $7.00 at some point in 2020.
In this article, I’ll firstly cover a range of topics that I believe will influence LINK in reaching my $7.00 target during 2020, and then analyze LINK on the long term daily charts to highlight some areas of resistance on the way toward the target.
Chainlink - Bringing Smart Contracts To The Next Dimension!
The whole idea of Chainlink is to become a bridge between today’s blockchains and data from the outside world. Created by Sergey Nazarov in 2014 as smartcontract.com, they have developed a set of tools that helps to connect blockchains and smart contracts to external resources in different networks and therfore is often considered to be a bridge between the blockchain world and the overall global ecosystem.
In today’s smart contracts, they have no outside connection with the real world what-so-ever and are considered to be completely closed systems. Smart contracts are exactly how they sound - they are digital agreements that are made extremely reliable by being run on a tamper-proof node network such as a blockchain. They can guarantee the correct execution of its contractual terms through cryptographic means. However, the problem with smart contracts currently is that they exist as separate entities closed off to any other outside network. For example, Ethereum cannot connect with data from outside sources. Although this helps to create a secure, closed system that can guarantee validation - it limits the scope as to what smart contracts are capable of achieving.
This is where the product created by Chainlink shines as they provide an oracle service platform. This service provides a trusted data layer between the real world and different blockchains. Chainlink is one of the leading oracle solution providers who hope to bring blockchain technology to a mass audience by giving smart contracts the capability to do so much more. Most importantly, the platform provided by Chainlink is a decentralized oracle system with no single point of failure - something which today’s oracles struggle with.
The infrastructure consists of an off-chain and on-chain element. The off-chain element is the assembly of oracle nodes that collect information from 3rd part sources such as databases and APIs. All of these nodes work independently from each other. The on-chain element selects the most suitable oracle when a smart contract request for one.
The whole infrastructure runs on the LINK token. For Ethereum to be able to use an oracle from Chainlink, they must be able to pay the node operator with LINK tokens. LINK is an ERC20 token with an additional ERC223 element for the transfer and call function.
ChainLink differs from other oracle services today as they work hard to create a trustworthy data source, rather than relying on the trust of the oracle’s credibility and past history. This is important because if a smart contract relies on flawed data, the entire operation is useless.
Chainlink does not rely on one single data feed to create a trusted service, instead, it chooses to use multiple feeds to increase the validity.
Additionally, they have a reputational system in which oracles that have the best track record receive a higher authority and higher fees. Furthermore, Chainlink also has its own escrow in place with the nodes which require nodes to have to put LINK escrow. If they return faulty data then they forfeit the deposit.
Chainlink is making great progress
Looking at the graph below, we can see that the running total of chainlink related contracts continues to increase at an extremely aggressive pace!
We can also see that the running total of Chainlink Node jobs Runs continues to surge past the 400K threshold.
Furthermore, the number of on-chain addresses for LINK continues to explode;
This sentiment is further shared with data from Santiment that shows that Daily Active Addresses has been on the rise ever since Chainlink went live on top of Ethereum toward the end of May.
Last but not least, Link has the highest ROI for any cryptocurrency with a market cap of $45 million and is at least 1 year old.
The Mainnet Launch Took Chainlink Into The Spotlight
Chainlink had launched its mainnet on Ethereum toward the end of May. Although it is only linked to Ethereum right now, the team has plans to eventually become blockchain agnostic. Additionally, any scaling issue debates will be put to rest when Ethereum 2.0 is released.
The integration of Chainlink into Ethereum created end-to-end reliability for smart contracts.
Reliable market prices are one of the first decentralized oracle networks made on Ethereum, helping to give birth to a reliable DeFi (decentralized finance) market in which market data can be fed into smart contracts for things such as derivates and futures trading.
The launch onto the Etehreum mainnet proved that the product created by Chainlink works efficiently as many had suspected that they would fail.
Partnerships Galore - Chainlink Linking Arms With Solid Partners
Recently, a partnership was announced between QuarkChain and Chainlink to integrate oracle technology into sharding technology - a scaling method in which all transaction processing is divided amongst a group of “shards” to allow for a higher transaction per second rate. Qarkchain is a high throughput blockchain that integrated Chailinks oracle to create a better smart contract development experience for enterprises.
Besides their affiliation with Ethereum, one of the most exciting partnerships is their partnership with Google announced in June this year. This partnership with Google is important as it boosts the credibility of Chainlink.
This partnership is designed to allow for the placement of BigQuery data to be available “on-chain” using chainlink oracle smart contracts. With this partnership, Google and Chainlink hope to close the loop and allow for bidirectional interoperation which will allow blockchain data onto cloud services, and cloud service data available on-chain to smart contracts.
The way it works is that Ethereum dapps will request data from LINK oracles which will retrieve the data from a web service built with Google App Engine and BigQuery.
Chainlink has managed to amass a long string of important partnerships that can all be found here.
Although the team does not provide a roadmap, Chainlink has a very detailed progress report which can be found here. You can see that they have many active things to be developed on as this project continues along its developmental curve. The team prefers to take a very humbled marketing approach in which they rarely announce anything until it is ready to be integrated. This type of marketing is promising as it lets the product talk for itself, rather than pumping millions into shady marketing campaigns.
Chainlink (LINK) Price Analysis
LONG TERM - DAILY CHART
What Has Been Going On?
Analyzing the daily chart above, we can clearly see the 900% market surge that took place from May through June. The bullish surge reversed when LINK reached the $4.50 level, causing the market to roll-over and drop. LINK went on to fall over the following months until strong support was found at $1.50, provided by the 200-days EMA, during September 2019.
After reaching this level of support, we can see that LINK has rebounded and has been climbing further higher every since.
Are We Bullish Or Bearish (as of October 2019)?
As of October 2019, LINK is still considered to be bullish. The rebound at $1.50 and subsequent break above $2.00 and the 200-days EMA has allowed this market to return to a bullish trading condition in the short term. For this bullish trend to be invalidated, we would need to see LINK fall and break beneath the $2,00 level, at which point the market would be considered neutral. For LINK to turn bearish, we would need to see price action drop back beneath the 200-days EMA and fall below the $1.50 support region.
Where Is The Resistance On The Way Up TO $7.00?
On the way up toward the $7.00 2020 target, initial strong resistance is to be located at the October 2019 high at $2.93 and at the $3.00 level. If the bulls break above $3.00, further higher resistance is expected at $3.32 and $3.52, provided by the short term 1.272 and 1.414 Fibonacci Extension levels. This is followed up with resistance at $3.81 (short term 1.618 Fib Extension) and $4.00.
If the buyers continue to break above $4.00, the next level of significant resistance lies at $4.50 - the previous ATH. If the bulls continue to drive the market above $5.00, resistance will be expected at $5.27 and $5.67 (medium termed 1.272 and 1.414 Fib Extensions). This is followed up with resistance at $6.00 and $6.25 (medium termed 1.618 Fib Extension).
So long as the bulls can clear $6.50, they will be then free to make an attempt at my 2020 target of $7.00. Resistance here is provided by a long term 1.618 Fibonacci Extension level (drawn in purple).
Chainlink most certainly has seen a wonderful year of trading in 2019 after being able to create a fresh all-time high during the course of the year. I believe that in 2020 this price ascension will be able to continue much higher, allowing LINK to surge by a total of 185% toward the $7.00 region. This price increase will largely be driven by the fact that LINK oracles usage will increase further over the following months as the team continues to work on their systems. Furthermore, a strong partnership with Google will also help to further improve the credibility of LINK allowing it to drive higher.
For LINK to be able to reach $7.00, it first must break above strong resistance at $3.00, $4.00, and at $4.50 (previous ATH). Above $5.00, resistance is located at $5.27, $5.50, and $6.00. Before reaching $7.00, LINK must break above $6.25 and $6.50 to be free to make an attempt at the 2020 target.