Summary
- Chainlink has endeared itself to institutional investors by creating a solid foundation around DeFi.
- The Off-Chain Reporting (OCR) upgrade will improve efficiency and promote LINK’s performance in the market.
Chainlink lost 5% of its value today to trade at $27.33 at press time. However, LINK’s trading volume was 58% higher than the volume traded 24 hours earlier, signaling increased interest in the commodity. The crypto-asset was 0.8% lower than the price set 7 days ago.
Impressive market performance and institutional affinity
Chainlink’s performance has made significant gains from reduced LINK volumes in crypto-exchanges. Data supplied by Santiment shows that exchange-held LINK has been steadily reducing since September last year.
The reserves held in exchange platforms currently stand at 14.6%, down from 34% six months ago. This is an indicator that most investors are keen on holding on to their LINK, with bullish anticipation on price movements. Further declines in exchange-held LINK could cause scarcity and help propel prices higher.
LINK price movements have also recently benefited from the momentum provided by Grayscale’s announcement that it would invest in the crypto-asset. The investment firm has been keen on Ethereum and Bitcoin in the past and has been running investment trusts for each of them.
In the recent development, Grayscale revealed that its Chainlink Trust will provide accredited investors with support for their shareholding with LINK. A lock-in period will apply to the shares and will not be redeemable. LINK’s price rose by 14% within 12 hours following the announcement.
Transfer volumes are also an important indicator of an asset’s performance in the market. LINK’s transfers adjusted to a daily average stand at about $600 million. This represents an increase of about 235% for 2021. Put into context, LINK’s transfers over that period are twice the corresponding volume for Litecoin, whose market capitalization is 7% larger.
The cryptocurrency’s daily active addresses also point to an impressive run. Chainlink has gained 14% more active accounts in 2021, to comfortably retain the figure above 10,000. This return is an impressive one, considering that Chainlink runs on Ethereum’s network, which has taken a hit as a result of high gas prices.
In another development, Chainlink is among two additional cryptocurrencies adopted by AvaTrade. In an announcement made today, the firm revealed that as part of its investment strategy, it was reducing its uptake of Ripple, Ethereum, and Bitcoin Gold and taking up LINK and Uniswap.
According to the company’s CEO, Dáire Ferguson, the move is meant to optimize AvaTrade’s presence in the DeFi segment, which has been exhibiting good returns. As a result, the company’s clients will now be able to trade in LINK. The development shows institutional confidence in Chainlink as an investment asset and will likely influence a positive corporate affinity towards the crypto-asset.
Essential internal fixes
Chainlink has also been working on a Scalability Upgrade, designed to enhance its Off-Chain Reporting (OCR). Last month, the network announced that it was in the process of integrating its OCR.
The move is expected to significantly improve the performance of the Chainlink ecosystem and potentially propel prices higher. It is also expected to reduce the cost of operations by up to 90%. Also, it will enhance LINK’s position in the DeFi segment by speeding up the development of universally connected smart contracts.
The OCR upgrade will improve performance by scaling up smart contract data by a factor of ten. Chainlink projects that increased efficiency will increase LINK’s usage in the smart contracts segment and drive up its demand.
LINK technical outlook
LINK will find the first support at $26.6 and the second one at $27.1. A rally past this point will drive the price to the first resistance level at $27.9. However, if the bulls take charge, they may drive the price past the second resistance level at $28.5.
