Timothy Peterson, a chartered alternative investment analyst, says the Chainlink (LINK) token could be valued at US$32 by the end of 2020. Peterson’s comments come just days after LINK raised its price by 88% in the course of two weeks.
Argentina and the Neverending Story: What Happened to the Debt?
The explosive growth of the decentralized finance (DeFi) market is believed to be one of the main factors driving the demand for oracles such as Chainlink and Band Protocol (BAND) and Defi Pulse data shows that since June, the total value of DeFi blocked protocols has quadrupled.
Chainlink has upside potential, but its growth comes at a price
In the longer term, Peterson said the growth of the Chainlink network and historical deviations point to a more significant increase for LINK, but warned that prices above USD 32 may not be sustainable. Peterson said:
“I did a quick analysis of the growth rate of the Chainlink network and the historical deviations in price put LINK at USD 32 by the end of the year, but that price would not be sustainable. Investors who buy at high levels risk losing 50% or more of their investment. Most of the growth has already occurred.
The DeFi market has expanded rapidly over the past few months, causing most DeFi related projects to increase their valuations. Despite this, there is a significant valuation gap between major and smaller networks.
Tezos (XTZ) follows Chainlink to set a new record, but is USD 6 a realistic level?
For example, Chainlink is currently valued at USD 4.475 million. In contrast, Band Protocol, the second largest oracle project in the market, is valued at USD 257 million.
Venture capitalists, such as Spartan Black co-founder Kelvin Koh, have also reflected on the valuation gap. Koh said that over time, competing platforms such as Band Protocol could begin to catch up.
Bitcoin and gold prices fall as Trump praises ‘big stock market numbers
Consequently, if the price of LINK exceeds USD 30, it would put the market capitalization of the network at more than USD 10 billion. It remains uncertain whether Chainlink has fundamentals, user activity, and other metrics strong enough to support a $10 billion market capitalization by the end of this year.
Sentiment remains positive
According to market data provided by Santiment, Chainlink and Band Protocol recorded the highest level of social activity in recent days. Researchers said:
“BAND and LINK have been the pillars of our Emerging Trends platform over the past two days, measuring the highest percentage increase in social discourse related to cryptoactives and their issues”.
The growing interest in Chainlink and other oracle projects was also evident in Google Trends. But compared to major cryptosystems such as Bitcoin, there is less widespread interest.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, suggested that the price of LINK could rise in the short term. Van de Poppe said:
“The level is holding, great. Break USD 13 – USD 13.25, and I think we’ll try the highs again.
In the short term, most of the major cryptosystems face the risk of a reversal after the sharp drop in the price of gold and silver.
DeFi BAND and LINK tokens outperform Crypto Cash price by gaining 100% in 10 days
As an example, the price of Bitcoin (BTC) fell by more than 4% in 18 hours as its momentum weakened and today many altcoins also register double-digit losses.