Chainlink temporarily took 8th position by market cap
Chainlink temporarily took 8th position by market cap, overtaking BCH
On 18 January, oracle-centric blockchain protocol Chainlink (LINK) overtook Bitcoin Cash (BCH) to become the eighth largest cryptocurrency in the industry.
A few hours later, Chainlink’s market capitalisation Immediate Bitcoin fell back below that of BCH, and at the time of writing is around $8.6 billion, about $700 million away from eighth place.
Why is Chainlink growing so rapidly?
In the last 24 hours, Chainlink’s price has risen 7%: LINK’s momentum is probably due to the positive sentiment around DeFi.
The DeFi market as a whole has tracked a strong rally in recent months, with AAVE and SUSHI as the prominent tokens. The bullish trend can be attributed to the rapidly growing parameter of Total Locked Value (TVL), which measures the amount of capital allocated in DeFi’s protocols.
As of 18 January, the TVL in DeFi stands at approximately $24 billion and continues to grow rapidly.
Chainlink benefits from the growth of decentralised finance as oracles provide DeFi protocols with essential market data.
When DeFi protocols, such as lending platforms or exchanges, need price data, they resort to oracles such as Chainlink and Band Protocol. Therefore, when the number of users in the DeFi market increases, oracles benefit from the growing TVL.
What will be the next move for LINK?
Santiment’s on-chain analysts revealed that dormant tokens continue to move. This trend has further fuelled the bullish trend of various cryptocurrencies, including Bitcoin, Ether and LINK:
„Dormant tokens continue to be moved at elevated rates during this bull run in the #crypto sector, and contractions in our ‚Mean Dollar Invested Age‘ metric indicate the increased rate of $BTC, $ETH, $LINK, $LTC and in particular $REN (which caused its +60% rise in one week).“
Having surpassed its all-time high, LINK is currently technically in a „price discovery phase.“ In technical analysis, price discovery occurs when the value of an asset grows above its record high and starts looking for a new ceiling.
In addition to Chainlink’s positive technical factors, the oracle provider does not have many competitors with the exception of Band Protocol, which is based on Cosmos‘ blockchain network.
Chainlink’s network effect is likely to act as another catalyst in the near future, especially as Ethereum (ETH) continues to dominate the DeFi sector.