Chainlink Jumps 9% on the Day Crypto Market Loses $8bn; Here’s Why
Chainlink (Ticker: LINK) rebounded from its short-term corrective downtrend on Wednesday as its price surged 9 percent on a 24-hour timeframe.
The LINKUSD exchange rate established an intraday high near $14.11 on Binance exchange, up 21.95 percent from its week-to-date low. The pair’s gains appeared despite a broader sell-off in the cryptocurrency market, wherein the overall valuation fell by more than $8 billion.
Chainlink chart on TradingView.com shows its bullish continuation bias.
What helped the Chainlink token during the turbulent 24-hour period is the growing demand for DeFi assets. Traders increased their bids for LINK, COMP, MKR, and other decentralized finance tokens after the launch of Yam Finance.
The new “yield farming protocol” went live on August 11. It issued about 2 out of 5 million of its native YAM tokens so to make them available as yields for users who stake the following assets:
- ETH/AMPL Uniswap LP tokens
The announcement led to a new wave of a buying frenzy in the DeFi space. Like Chainlink’s LINK, Compound’s COMP token rallied by more than 35 percent in just 24 hours. Aave’s LEND jumped 16 percent – and Maker’s MKR climbed 24 percent within the same period.
Index from Messari shows DeFi tokens' performances in the last 24 hours
Non-DeFi tokens were not that lucky. The benchmark cryptocurrency Bitcoin fell 1.91 percent on rising US Treasury yields. Other proof-of-work assets that had the least probability of becoming a staking token for a DeFi pool, also fell, with Ethereum, XRP, and Litecoin plunging by 2-5 percent.
It is also possible that traders left the top brass to seek hedge in the booming DeFi market, especially after the launch of Yam Finance. Each of the DeFi token listed above surged by more significant margins against Bitcoin in the last 24 hours, according to data provided by Messari.
Chainlink Technically Overblown
On technical parameters, the Chainlink token was extending its stay inside an overbought area, according to its Relative Strength Indicator. That amounted to a price correction–and between August 11 and 12, the cryptocurrency fell by about 17 percent.
Its latest rebound solely came on the staking hype as discussed above. That also established $11, the level from where LINKUSD retraced to the upside, as a reliable support level. Michaël van de Poppe, a cryptocurrency analyst, called it “a good bounce,” adding that the pair could now retest $14.
Chainlink bounce brings $14-retest back into the view. Source: TradingView.com, Michaël van de Poppe
Investment analyst Timothy Peterson doubled up the bullish call, noting that the Chainlink token would keep rising until $32 by the end of 2020. But there will be a catch.
“Did some quick analysis of Chainlink’s network growth rate and historical deviations in price put LINK at $32 by the end of the year, but that price would not be sustainable,” said Mr. Peterson. “Investors who buy at high levels risk losing 50% of their investment or more. Most growth priced in already.”
LINK was trading at $13.9 at the time of this writing.