Larry Fink, CEO of BlackRock, Dominates the Financial News Headlines
The price of Chainlink (LINK) experienced a significant surge of 16% to reach a peak of $16 on January 17th, following optimistic remarks about asset tokenization made by Blackrock CEO Larry Fink.
During a Bloomberg interview on January 12th, Fink stated that asset tokenization is the next step for institutional involvement in the cryptocurrency sector. Chainlink, a prominent blockchain oracle that provides offline price feeds to asset tokenization projects, appears to have benefited from Fink’s comments, as indicated by market data.
Asset tokenization has emerged as a prominent theme in the crypto market in 2024, with various traditional financial institutions, including JPMorgan and SWIFT, making significant strides in the crypto asset tokenization and Real World Asset (RWA) sector over the past year.
Chainlink occupies a critical position at the intersection of decentralized finance and traditional finance. By bringing offline price and data points onto the blockchain, Chainlink offers essential services to support the growing real-world asset sector. The company is poised to capitalize on the asset tokenization wave, particularly in the long run, as users of its price feeds are required to stake units of LINK to access key technical features.
In response to Fink’s positive remarks about asset tokenization, Chainlink’s price surged by 16% within 48 hours, rising from $13 to $16.
However, critical on-chain data suggests that the recent rally in LINK’s price may not be sustainable in the short term. The Santiment daily active addresses (DAA) metric, which measures network participation by aggregating the number of unique wallet addresses interacting on a given day, reveals that while the LINK price increased by 16% between January 12th and January 17th, Chainlink’s DAA only rose by 4% during the same period.
An increase in daily active addresses typically indicates growing network demand, which is favorable for the token price. However, the lack of a substantial increase in network usage alongside the price surge suggests that speculative swing traders, influenced by Fink’s bullish comments, are primarily driving the current rally.
Moreover, Chainlink’s largest investors have been taking advantage of the price rally to book profits, further indicating a bearish short-term outlook. The supply held by top addresses metric from Santiment shows that these investors sold 2.3 million LINK tokens between January 12th and January 17th, reducing their balances to 748.5 million LINK.
At the current price of $15.8, these top investors have sold off LINK tokens worth $36 million in the past two weeks. A decline in balances held by large investors is typically seen as a bearish signal and could potentially overshadow the bullish sentiment of retail traders, exerting downward pressure on the LINK price.
Based on the on-chain data trends analyzed above, it is unlikely that Chainlink’s price will reach $20 in the short term. The recent rally appears to be driven mainly by speculative trading, and without significant growth in fundamental metrics such as network usage and whale accumulation, the LINK price may struggle to reach higher levels.
However, if the momentum turns bearish as predicted, initial support can be found around the $14.5 area. The global in/out of the money (GIOM) chart from IntoTheBlock highlights key support and resistance levels by identifying historical entry prices of current LINK holders. At the minimum price of $14.5, 42,190 existing Chainlink investors have acquired 112.5 million LINK.
In the short term, these investors may engage in short-covering maneuvers to avoid incurring net losses. If this scenario unfolds, the LINK price is likely to consolidate just below the $15 mark in the coming days.
On the other hand, the bullish outlook can be negated if the bulls manage to flip the $20 territory. However, as indicated by the data, 94,850 holders acquired 50.6 million LINK at the minimum price of $18.8. This could potentially lead to a significant sell-wall at that level, triggering a retreat in the price.
It is essential to closely monitor the market developments to assess whether the current rally in Chainlink’s price is sustainable or if a correction is imminent.
