Chainlink Price Prediction 2021 & Beyond [Latest Analysis]
Cryptocurrency prices are soaring once again as mass adoption is slowly building up. Payment processor giants such as PayPal and Square are finally giving crypto some well-deserved attention by putting it directly into the hands of billions of users.
This has led the general public to become increasingly interested in newer and “cheaper” projects such as Chainlink (LINK). Many new investors are now wondering what makes LINK so popular and how it managed to creep up in the top 10 of cryptocurrencies by market capitalization. How good of an investment is it and what can be expected in the future?
In this article, we aim to answer all these questions, as well as provide a detailed Chainlink price prediction for 2021 and beyond. By analyzing the fundamentals behind the hype, we will uncover Chainlink’s true potential and discover how it connects to the future of decentralized finance (DeFi).
After reading this, you will be able to make an informed decision and decide if LINK should be a part of your long-term portfolio.
What is Chainlink?
Launched in June 2017, Chainlink is a decentralized oracle network that allows smart contract blockchains to translate real-world data in an effective and secure manner.
Since the concept, known as decentralized oracles, is rather new, it doesn’t compete but rather collaborates and supports most projects in their efforts to grow further. Originally intended to enhance Ethereum-based blockchains, its goal has now evolved into connecting all smart contract blockchains within 2021.
Let’s get into more detail about how decentralized oracles work.
What are oracles?
For those unfamiliar with the concept, smart contracts are agreements that can be programmed to self-execute once certain conditions are met. They can be used for a wide range of things such as financial services, insurance policies, real estate transition, credit enforcement, and many more.
However, since smart contracts were first created on the Ethereum blockchain, a recurring issue has persisted.
Smart contracts rely on external information (off the-chain) to effectively execute their terms on the network (on the-chain). This off and on-chain exchange of data is vital to their functioning.
Furthermore, the network handles multiple oracles simultaneously to provide true decentralization and avoid single-failure-point scenarios.
There are three types of smart contracts present on the Chainlink blockchain that allow it to complete this process:
Reputation contracts - that verify the integrity and reliability of the oracles
Order-matching contracts - that match the SLA requests with the best oracles.
Aggregation contracts - which collect the data from the oracles and match the most accurate results with the smart contract that needs them.
How is the LINK token used?
The LINK token is used in two different ways to fuel the functioning of the network:
Holders use LINK tokens to pay network fees to the node operators (oracles) when requesting data translation through smart contracts.
Node operators stake LINK tokens to prove their commitment to the network. The more tokens they bid, the better their chances are to get selected by the reputation contracts to fulfill requests and get paid for their effort.
Furthermore, due to their popularity, LINK tokens can be bought and sold on most crypto exchanges for various FIAT or digital currencies. In addition to their usage on the Chainlink network, they can be used to access a wide array of financial products such as staking, lending of many centralized and decentralized trading platforms, etc.
Chainlink’s connection to decentralized finance
The Chainlink network supplies data to smart contracts in a decentralized way and from multiple sources. This, in turn, ensures the security and reliability of the blockchain. And since smart contracts are essential to DeFi exchanges’ functioning, the connection between the two is obvious.
For example, In February, lending protocol bZx suffered multiple hacks as the platform used Kyber Network as a single oracle, or supplier of asset prices. As a result, the DeFi ecosystem turned to Chainlink to solve the issue.
By the summer of 2020, most major names in the DeFi space including Kyber Network, AVA, Graph Protocol, Opium Network, Synthetix, and bZx had integrated Chainlink’s oracles.
Chainlink price analysis
Before we can provide a reliable Chainlink price prediction, it is essential to analyze the historical price performance of the LINK token.
Charlink is quite new in the market, even by crypto industry standards. The first time we notice a significant price movement is during the short DeFi-related run-up in the summer of 2019.
Beginning in May 2019, LINK outperformed most of its peers with a 900% rally. The coin started at $0.40 and reached its first significant all-time-high of $3.80 in July 2019.
The bearish condition that followed led to a consolidation period, dropping 60% off LINK’s value in the ensuing three months.
However, against all expectations, it was one of the rare coins to enter a short-lived recovery from September to November 2019.
LINK bull run beginning of 2020
At the end of the 2019 consolidation, LINK had reached a low price of $1.75.
In January, the token joined the 2020 bull run. Price-performance grew to prior highs thanks to the increased usage of LINK’s ecosystem by major DeFi platforms, following the aforementioned bZx series of hacks. The token gained more than 180% value, reaching a new high of $4.75
However, like most crypto assets, LINK lost more than 60% value due to the COVID19 crash. After finding a temporary bottom, it immediately entered a steady recovery phase, following the (still) bullish market trend.
DeFi bubble to present day
It took Chainlink only 3 months to return to its pre-crash levels.
Shortly after the $4.75 high was broken in August 2020, the coin entered a parabolic upward curve, reaching a new ATH at almost $20.
Unfortunately in September 2020, the DeFi bubble burst, which crashed LINK’s price by 60%, down to $7.5 per token.
Presently, LINK has rejoined the rest of the market into this new bull run. It has been following an uptrend channel for the past 2 months, gaining more than 100% since it bounced from the $7.50 level.
What we can conclude from this short 2-year analysis is that LINK shows some particularities of successful cryptocurrencies:
Excellent long term gains since its appearance on the markets (+9000% ROI).
Sharp periodic price swings due to its youth on the markets.
Leads market rallies thanks to disruptive technology.
A notable token that boasted these qualities was Ethereum, and we can hope LINK will follow in its footsteps.
Chainlink price prediction
The next chapter will be dedicated to short, mid, and long term Chainlink price predictions. While we try to be accurate at all times in our analysis, please keep in mind that these are pure speculations and should always be taken with a grain of salt.
Link price prediction EOY
As the end of 2020 is getting closer, we can give a short-term Chainlink price prediction by combining some fundamental and technical analysis.
The cryptocurrency market is finally experiencing a new bull season, with Bitcoin leading the way and quickly catching up to its prior all-time-high.