Chainlink nears make or break price amid strong ecosystem growth

Chainlink continued its strong comeback by reaching a four-week high for the second day in a row.

Chainlink (LINK) has jumped to $12.3, up over 53% from its lows this year, as its ecosystem and use cases continue to grow.

Data from DeFi Llama shows that Chainlink maintains the largest market share in the oracle sector with a total secured value of $23.3 billion. It surpasses rivals such as WINKlink, Chronicle, and Pyth Network, which have a total TVS of $20.5 billion.

Chainlink’s surge comes as investors anticipate a revival in the DeFi sector. AAVE (AAVE), the largest part of the Chainlink ecosystem, reached its highest level since April 2022.

There are also signs that the Chainlink ecosystem is expanding. This week, Stader Labs integrated its Cross Chain Interoperability Protocol, which supports token transfers across Arbitrum, Ethereum, and Optimism. Other recent Chainlink integrations include Arcadia Finance, Backed, and Nexera, formerly known as AllianceBlock.

⬡ Chainlink Adoption Update ⬡

This week, 19 integrations of 6 took place #Chainlink Services in 8 different chains: @arbitrum, @avax, @basis, @BNBCHAIN, @ethereum, @optimism, @0xPolygonAnd @zksync.

New integrations include: @ArcadiaFi, @SupportedFi, @fufuture_io,… pic.twitter.com/x6x2W32z0L

— Chain Link (@chainlink) September 22, 2024

Chainlink’s price has also surged as demand for its coin and futures continues to grow. Data from CoinGlass shows that futures open interest has risen to $187 million, the highest point since July 24.

At the same time, data collected by CryptoQuant up to August 20 shows that balances on exchanges are on a downward trend. The decline in coins on exchanges is a sign that many investors are holding on to their tokens.

However, data compiled by Nansen shows that LINK has had a CEX inflow of around $5 million in the last 24 hours. CEX inflows mean that some investors are starting to exit.

Another notable trend is that the number of smart money investors holding LINK has dropped from 133 to 97 in December. The balances held by these investors have fallen from over 2.4 million in October of last year to 900,000.

Chainlink smart money assets | Source: Nansen

A potential risk for Chainlink investors is that more than 373 million tokens worth $4.2 billion are still locked. Recently, developers unlocked $208 million worth of tokens, most of which were moved to Binance. Future token locks could lead to significant dilution for existing investors.

Chainlink price is approaching a major resistance Chainlink price chart | Source: TradingView

On the daily chart, Chainlink bounced from its year-to-date low of $8.01 to $12.3. It turned the 23.6% Fibonacci Retracement point at $11.52 into support. Additionally, the coin climbed above the 50-day moving average, while its Relative Strength Index rose to 64.

The RSI is an oscillator that measures the rate of change of an asset. It increases when an asset gains momentum. Further upside could be confirmed if LINK breaks above the key resistance level at $12.68, the swing high from August 26.