TL;DR- It’s unlikely to happen in this market cycle (2018-2022), but could easily happen in the next market cycle (2022-2026). Among cryptocurrencies like it, Chainlink dominates. Chainlink has a decent chance at breaking $100 in 2022 (say, 30%), and a decent chance at breaking $1,000 by 2030 (say, 50%).
When I was new to cryptocurrency, I remember reading headlines about how Ethereum was going to reach $1,000 or how Bitcoin was going to reach $50,000. I thought it was insanity. Then it all happened. I still feel the same way when I look at predictions for coins like Chainlink reaching $1,000- but then I realize it’s totally possible.
Chainlink sits on top of the Ethereum blockchain so with any growth Ethereum experiences, Chainlink will experience too. There are currently way too many cryptos- and I believe a reckoning is coming. Coins that have no use case or are just carbon copies of others will fail, and only the top 1% or so of cryptos on CoinMarketCap will make it. Ethereum is a good rocket to have your wagon hitched to.
What is Chainlink?
Chainlink is an Oracle Cryptocurrency. Think of oracle cryptos as the Google search engines of the blockchain space. Chainlink fetches real-world data (like exchange rates of USD-EURO, or temperatures) in a decentralized manner.
The premise with cryptocurrency is that everything needs decentralization to avoid manipulation and corruption. Cryptos like Ethereum and Cardano make sure that smart contract and transactions are decentralized. Chainlink makes sure that data gathering is also decentralized.
This means if Euros need to be converted to dollars for a smart contract to execute, Chainlink could query tens or hundreds of different entities and average the price. The result, whatever it is, would be damn accurate. Isn’t that awesome?
LINK is Chainlink’s utility token. Utility tokens are currencies on the platforms, which can be used in exchange for services. The more apps on Ethereum that use Chainlink to pull data, the more LINK they’ll need, and the more the LINK price will increase.
Chainlink price action
In March 2020 during the pandemic crypto crash, Chainlink (LINK) hit a low of $1.79, then peaked around $50 during the April-May 2021 peak. A 30x during a bull run is outstanding. Such a price history suggests that in the next bull run LINK could easily make it to $1,000.
Unfortunately, while many coins like Bitcoin and Ethereum have surpassed their April/May 2021 all time highs, Chainlink has had a tough time stabilizing and having growth since then. It’s sitting at $30 at the time of this writing, which is 40%+ below its May all time high.
LINK will likely only break the $100 mark per token in this current market cycle, if that. When I say ‘market cycle’, I’m referring to the typical 18-month bull run and 30-month crypto winter that follows a Bitcoin halving event. Bitcoin halving events happen every four years, with the next event set to happen in June 2024. Due to supply and demand dynamics, this supply flow decrease of BTC drives the price up. All other cryptos follow, including chainlink. If LINK does break $100, it will likely do so by mid-2022 at the latest.
But the current crypto market cycle is changing, because now crypto is gaining wider adoption. Institutions are now holding Bitcoin, and people I wouldn’t suspect know about it (like my barber) are investors now too. Is the four year boom and bust cycle approach to things over? We have yet to see.
Other Oracle Cryptos
A frequently overlooked piece of crypto analysis is the competitive landscape. What’s to stop another crypto project from coming in and stealing Chainlink’s thunder and usage? What Chainlink does isn’t rocket science. Given enough time and funding, other projects could do what Chainlink has done. The problem is that Chainlink doesn’t run a monopoly on the oracle crypto space.
There are other solid projects in the oracle space, including Band Protocol and API3. Band Protocol was founded by Stanford and MIT graduate students, and has solid financial backing. API3 describes its advantages over the Chainlink network:
“Requests on Chainlink are distributed across both oracles and data sources. API3 believes the solution is to allow the API providers to run their own nodes. This creates competition that will lower inflation, it promotes decentralization, and it allows a way to actually govern the data providers themselves.”
As seen above, Chainlink holds a 90%+ dominance for oracle cryptocurrencies by market capitalization. This is good news for now- but it’s likely that Chainlink’s dominance will wither away with time. This doesn’t mean that Chainlink will see price decreases, it just means that Chainlink’s growth won’t be quite as fast. Look at the below chart of Bitcoin’s dominance over the long run- eventually, other solid cryptos enter the space and ‘steal’ investment from Bitcoin.
Upcoming developments/potential price catalysts for LINK
While Chainlink’s main stomping grounds has been the Ethereum blockchain, the project has been busy inserting itself into several smart contract crypto platforms. One such project is Solana, where Chainlink has announced it will have an integration in Q4 2021. I see Chainlink making partnership with smaller cap smart contract cryptocurrencies in the future, like Avalanche. A Coin Telegraph article noted that Chainlink forges an average of 1.4 partnerships per day. The Chainlink team is definitely busy spreading the platform far and wide.
Google, now a $2 trillion dollar company, first built a search engine to help make the world’s informaton universally accessible. Chainlink makes real-world information accessible to the blockchain. If blockchain sees even modestly more adoption, which will happen, demand for oracle cryptos will only increase.
We’re currently in a place where less than 3 to 4% of the world’s population has invested in or uses blockchain technology. Chances are this figure is going to grow by many multiples given how useful blockchain tech is. In order for smart contracts to solve real-world problems, they need decentralized access to real-world data. Chainlink is the first in line to be able to do that as of now.
While I like to stick to large cap cryptos like BTC, ETH, and ADA, I do hold a small amount of LINK because I see a lot of real-world adoption coming. How high will LINK go? It may go quite a bit higher than you think it’s capable of.