The protocol, whose origins date back to September 2014, offers a solution that allows independent data sources to feed information into public records through a decentralized network. Naturally, in the last 6 years the project has also undergone particularly significant changes, to the point of attracting a growing number of investors and allowing the company to have a market capitalization of 4,275 billion dollars, compared to 101 million dollars two years ago. .
However, despite the growth of Chainlink as a protocol, performance of its LINK token remain exposed to the dynamics of supply and demand typical of the cryptocurrency ecosystem. The LINK / USD exchange rate reached $ 20,71 in August 2020, and from that point the pair experienced a significant sell-off, eventually losing the The move took 64% last September 23.
The collapse of LINK was the product of a bearish technical bias. As usual, the token rebounded, registering a 79,18% recovery. Nonetheless, it remained under bearish pressure, as a combination of technical and fundamental signals indicated an extensive downtrend among traders.
In particular, one of the bearish elements of LINK comes from the number of addresses. The Chainlink network is currently adding an average of 2.000 addresses every day. At best, in August, the project integrated around 10.000 per day. This shows an 80 percent decline which goes hand in hand with the alleged disaffection of the investors of the first hour.
Secondly, Chainlink's long-term fundamental solids have also fallen prey to a growing dominance of Bitcoin in the cryptocurrency market. More and more traders have reallocated their capital into Bitcoin, believing that the cryptocurrency would be at the forefront of those benefiting from the second stimulus package of the coronavirus. The bill, however, has stalled in the US Congress after Democrats and Republicans entered into negotiations for its entities.
In short, more than a few clouds seem to have concentrated on the skies of Chainlink. What will happen?