Article structure notification: the article is divided in three sections. First section is focused on short-term, technical and speculative analysis of the project – this is regularly updated part of the article. Second section is focused on general market and sentiment analysis and third section is focused on the long-term, fundamental analysis and future prediction of the project – this is occasionally updated part of the article.
Total Market Cap Analysis
Let’s first look at what the overall market is doing. As you know, all coin prices are highly correlated with bitcoin’s price action and by extension with the whole market. Every time we see a surge or plunge of the total market cap, it spills over to the individual coins and their prices.
Market has lost almost $30 billion in three days dropped through a crucial Fib786 height at $241 billion after invalidating the uptrend line it formed and respected since end April. A drop to support at $219 billion is now likely.
This should be the rebound zone back up to test the $241 billion mark from the other side.
As mentioned above, the overall market movements influence individual coins and LINK is no exception. A good thing for LINK holders is that Chainlink kept its value in terms of satoshis and it even surged in price today.
LINK was one of the best performing altcoins in the first 3 weeks of May, going from 8k to 18k sats in less than 10 days and setting the new all time high in sats. However, it then suffered a protracted 66% pullback that squeezed it all the way back to 10.7k sats. Then today’s candle happened and LINK rallied back up to even touch 14.2k at the daily highs. Consolidation above 13.3k is something to look for before entering a long position on LINK.
LINK hit a local high at 18745 sats and then retraced in a severe pullback back to Fib382 and almost touched the Fib236 at 10556 sats. This is a breakdown level for LINK. Breakout is at Fib618 at 14.6k sats.
Resistance is at previous highs at 18.7k satoshis and support is at 10.7k sats.
It is important that LINK sustains his zone right now and doesn’t break the ascending trendline (blue line on the chart below), which is pretty uncertain considering that their mainnet launch failed to hit the mark and was a typical hype the rumor, sell the news case as we warned in our previous update.
However, it is also prudent to keep in mind the old adage that says “buy the rumor, sell the news” – the mainnet launch hype might already be baked into the price and the bull rally spurred by it could already be over. So, keep your stop losses tight when trading LINK.
This timeframe shows the more granular picture of the happening around LINK. It seems to have found a support at the uptrend line and, even though it penetrated it and traded below it for almost a day, it hopped back and now needs to reconquer and consolidate above the important Fib50 height at 13371 sats.
Link has a weak trading volume that is also misreported and inflated by 1.7x – real volume is $12.1M and reported is $21.4 million in the last 24 hours. That is not too big of a overstatement for the crypto market, but both figures are very low considering that its neighboring coins in the market cap rankings, have at least double of its volume.
Moreover, LINK has a somewhat strong buy support, according to coinmarketbook.cc. Buy support is measuring sum of buy orders at 10% distance from the highest bid price. This way we can eliminate fake buy walls and whale manipulation and see the real interest of the market in a certain coin. LINK currently has a $381k of buy orders measured with this method, which sets LINK buy support/market cap ratio at 0.23%, a wide-market below average value. Bitcoin and Ethereum have a 0.27% and 0.28% ratios, respectively. This novel metric indicates there are a lot of manipulations, inflated liquidity and fake orders on all crypto trading pairs, including LINK pairs.
Mid May Update: Fundamentals
To assess fundamental health of a project, we used the FCAS metric. FCAS is a comparative metric whose score is derived from the interactivity between primary project lifecycle fundamentals: User Activity, Developer Behavior, and Market Maturity.
There are a few sub components which provide data to each fundamental:
User Activity is comprised of Project Utilization and Network Activity
Developer Behavior is comprised of Code Changes, Code Improvement and Community Involvement
Market Maturity is comprised of Liquidity and Market Risk. Market Maturity has less than 5% impact on a project’s overall FCAS.
FCAS ratings are on a 0-1000 point scale with a corresponding letter grade. Break points are based on standard deviations in the underlying component distributions.
900 – 1000 is marked as S for superb. 750 – 899 is marked as A for attractive. 650 – 749 is marked as B for basic. 500 – 649 is marked as C for caution. And finally, below 500 is marked as fragile. You can read more about it here.
Chainlink has been ranked as the B category – basic with overall 698 points as of May 7th. The strongest metric that contributed to this great score is developer activity that got 745 points, followed by user activity with 649 and market maturity that had 642 points.
So this is a data backed claim that LINK belongs among the average projects in crypto space with lots of room for improvement before we can consider it a serious contented for top 15-20 coins on the market.
Below are some of the most important news around the project in the last 30 days.
- Not much is happening around this project right now and we could not jot down any notable updates on this occassion.
- Long awaited mainnet launch is finally decided in a tweet by LINK – “Thrilled to announce that Chainlink Mainnet on Ethereum is going live on May 30th!”
Below is our long-term forecast where we cover general market movements and sentiment shifts before delving deeper into the specific predictions for LINK.
ChainLink platform acts as a decentralized Oracle network which allows anyone to become an Oracle, aka a provider of a data feed in exchange for LINK tokens. The ChainLink platform includes certification, validation and reputation services that enforce the integrity of the network’s Oracles.
ChainLink is known in crypto circles as a project that keeps things hush until they have something real to offer. They are notorious for their weak communication with the public. The team works hard on building a good product without hype, lines up users that are waiting on its release. Chainlink is consistently selected as one of the top blockchain technologies by leading independent research firms such as Gartner. It is well known for providing highly secure and reliable oracles to both large enterprises (SWIFT) and leading smart contract development teams.
ChainLink (LINK) Roadmap for 2019
There is no official roadmap. Chainlink is building brand new technology that is complex and needs to work more or less perfectly (and absolutely perfectly in terms of security) from the outset. Setting specific dates or benchmarks is just a way to apply unnecessary pressures that would risk causing mistakes.
What the team recommends is that you watch Chainlink’s open source codebase as it develops through;
their Github: https://github.com/smartcontractkit/chainlink
and their pivotal: https://www.pivotaltracker.com/n/projects/2129823
All we know beyond that is that some aspects of the core code are currently undergoing a security audit, and that development of the Epics is well on its way, although it would be reckless to try and speculate about particular dates or timelines.
Apart from that, the closest you will get to a visual Chainlink roadmap is this.
General Market Movements and Sentiment Shift
The downfall of altcoins that were mainstream media darlings at the start of the year, LINK among them, can be attributed, in part, to novice investors getting scared off once the bear market kicked in with a vengeance. Every resurgence of bitcoin in recent period, was met with the, for the most part, inability of altcoins to rally with it. Reason for that can be rookie investors learning from their mistakes, while smart money that was previously watching from the sidelines has begun to enter into bitcoin.
These entities weren’t about to buy BTC when it was trading at an all-time high, but they’ll take a look now, having missed the boat the first time around. None of them, it seems, are interested in altcoins however, despite the fact that many are trading at a 5x discount. Institutional investors may be cautious, but they’re not foolish.
How to evaluate fundamentals of a crypto project
We should consider crypto valuations like educated gambling, a ‘prediction market’ where we are betting on the odds of project and token success. There are some catalysts of success we can identify:
- Project success drivers (user traction, strong financial bottomline, good treasury management, network effects/synergies between users and token investors)
Real user traction is the most important driver of success, that is what most of holders call “adoption”. If people start using certain crypto project because they find it useful and it makes their life easier, that is a guarantee of success. So far, almost no crypto project can claim to have done so.
Strong financial warchest that will enable teams behind the project to develop their visions, incentivize other developers to join them and start using their product is also a crucial aspect of any project. Tied into it is treasury management – especially for the project that had big ICO proceeds. Temptation to squander all those millions into “conferences and events” (read hard-core partying on yachts and luxury hotels) was massive, especially if we consider that majority of token projects founders were no-names and ordinary employees that worked for a paycheck before the ICO fairy-tale happened to them.
Another adoption indicator – network effects, where every additional user of a good or service adds to the value of that product to others. When a network effect is present, the value of a product or service increases according to the number of others using it.
If you can objectively notice that your favorite token project has some of these traits happening for it, be happy – you might have found a winner.
- Token success drivers (favourable demand-supply dynamics, programmable incentives on token, aligned incentives with management team and consensus on token as common unit of value creation).
Token success is completely dependent on tokenomics. As defined by infloat.co, tokenomics involves the incentivization of certain stakeholders to ensure particular behavior.
So, tokenomics is essentially an incentive structure designed to ensure that a token has a purpose and utility within its native network. It is the study of how coins/tokens work within the broader ecosystem that can be considered as a sovereign micro-economy. This includes such things like token distribution as well as how they can be used to incentivize positive behaviour in the network.
For example, bitcoin is designed to ensure that bitcoin miners have a reason to mine new bitcoin. Miners validate bitcoin transactions and receive (or create) newly minted bitcoin in the process.
On the other hand, individuals, businesses and other bitcoin users pay a transaction fee for miners to include their transaction in the next block. This ensures that even when all bitcoin have been minted (to the tune of 21 million, which should happen in around 2140), bitcoin miners are still incentivized to keep ‘mining’ (i.e. validating transactions).
To paraphrase all of the above in the simplest terms: if you, after weeks of research and reading, can’t figure out why the project needs to have a token, it probably doesn’t.
So why does the token exist then?
– To make the project founders rich.
But there are some people on Twitter, Reddit, Telegram claiming otherwise.
-Yes, they are either: paid to do so by those same founders, they are desperate and delusional bad holders or they are just stroking their own ego with newly learned fancy economic terms and jargon.
Needless to say – stay clear of such projects.
Our LINK Price Prediction for 2019
LINK, as the rest of the market, is tied at the hip of bitcoin’s price action. If bitcoin embarks on another bull run, LINK can hope for one as well. Since that is very unlikely, don’t expect much to change for LINK price-wise in this year. So 2019 will be a year of boring sideways action with minor bitcoin ignited jumps and slumps.
The main currency in cryptocurrency markets is Bitcoin and given this, altcoins tend to fuel Bitcoin runs and Bitcoin tends to do the same in return. Given this relationship, Bitcoin price movements (or lack thereof) tend to effect altcoin prices.
When Bitcoin goes up swiftly, it will likely:
- Suppress or depress altcoins as money flows into Bitcoin;
- Or, take altcoins along for the ride
In cases when Bitcoin plunges, it will likely:
- Depress altcoins as money flows into fiat;
- Or, cause altcoins to boom as money flows into them, but this is rarely the case.
When Bitcoin moves sideways, it will likely:
- Cause altcoins to mimic that as traders wait for a clear sign on the direction of the market;
- Or, cause altcoins to flourish as traders look for returns in altcoins and try to get favorable trades in terms of BTC pairs.
To summarize, Bitcoin is the focal point of the crypto market in many ways, and with BTC trading pairs on every exchange, the gravity of Bitcoin is hard to evade.
The majority of projects will fail — some startups are created just to gather funds and disappear, some would not handle the competition, but most are just ideas that look good on paper, but in reality, are useless for the market.
Vitalik Buterin, co-founder of Ethereum said:
“There are some good ideas, there are a lot of very bad ideas, and there are a lot of very, very bad ideas, and quite a few scams as well”
As a result, over 95% of successful ICOs and cryptocurrency projects will fail and their investors will lose money. The other 5% of projects will become the new Apple, Google or Alibaba in the cryptoindustry. Will LINK be among those 5%?
High probability of that happening.
First and foremost, Chainlink has built a broad and ardent community that is more educated and patient than most of other “get rich quick” altcoin’s communities where holders only discuss price in a hostile and ill-bred manner.
The ChainLink team is very balanced in their approach to the 3 most important dimensions of every crypto project: technology development, forging business partnerships and community fostering.
There is no competitor to Chainlink that comes close to functionality offered or where they are in-terms of development. Even though there are some concerns with some specific areas of the system, overall it’s clearly a well thought out network that has some great minds behind it.
The initial version of their main-net won’t solve the “Oracle Problem” in its entirety, but it will be a huge step forward in doing just that. The ability to specify multiple oracles to undertake one single request and aggregate that answer back on-chain will still be a first in the crypto world. Then it’s only just a matter of time until we see more of the on-chain mechanisms deployed, but that’s an article for the future.
All of this summed up means one thing: LINK might live through couple of orchestrated and, for a regular trader, completely unpredictable pumps but the majority of time will be murky sideways trading with small volume and no significant interest from the market.
Price will heavily depend on what BTC will do and since many analysts think BTC will not be making big moves in this year, it is hard to expect LINK will do them either. The price will probably stagnate and record slow-moving depreciation or appreciation depending on the team activity, potential technological breakthrough or high-level partnership.
Market prediction for ChainLink 2019
With the market being completely unpredictable, forecasting the cryptocurrency price is really more of a gamble and luck rather than a data driven guesstimate.
Let’s throw a glance at the eminent publications and personalities, and their predictions regarding the ChainLink (LINK) price, which will give us another point of view to consider:
Trading Beasts have given LINK prediction on monthly basis and they have forecasted that by the end of 2019, Chainlink might reach $0.78 to the maximum and $0.53 to the minimum.
Coin Fan is good at giving optimistic numbers and has predicted that by the end of 2019, LINK might reach $3.18, which is way more bullish and optimistic a prediction. They have even forecasted that by 2023, LINK might reach as much as $300, which is an unbelievable prediction.
Digital Coin Price
Digital Coin price also has given a monthly prediction for Chainlink and they have projected that by the end of 2019, LINK might reach $0.743, which is almost double the current price.
Wallet Investor is known for giving not so optimistic prediction for almost every digital currencies. Even for Chainlink, it is not quite different. They have predicted that by 2019 end, LINK might go down to $0.325.