Photo: Xinhua

Chainlink (LINK) has been going absolutely parabolic lately – shooting past $18 before falling down to $16.88 at the time of writing – and it is now the fifth-biggest crypto, according to CoinMarketCap.

What is Chainlink?

Its website says it is a “framework for building decentralized oracle networks that give your smart contract access to secure and reliable data inputs and outputs.”

Too much to process?

Charles Hayter, the CEO and co-founder of tracking platform CryptoCompare, puts it in layman’s terms: “Chainlink is at its core a means of bridging the gap between the world of blockchains and the outside world.” 

Many observers expect the crypto to skyrocket to at least $100-$200 in this cycle, with some wildly optimistic projections going as high as $1,000, at least in the longer term. Many hope its price action will mirror Ethereum’s jaw-droppingly rapid appreciation in the 2017 bull run.

But is now the time to buy, or should investors wait for a correction?

Some investors fear its dramatic move up – starting from under $2 at the bottom of the Covid-19 crash in March – may be unsustainable and have taken profits.

Their skittishness may be justified, according to a Cointelegraph report.

Chainlink investors may be “becoming increasingly uncertain in its prolonged rally,” according to on-chain analytics resource Santiment, which reported that though there weren’t “many bearish indicators or signs of an impending top” for LINK as of last week, that may no longer be the case.

The number of LINK deposits into crypto exchanges reached an all-time high (ATH) of 8.2 million, the same day the token reached an ATH price of roughly $15. LINK holders may be moving their tokens to exchanges to take profits as the last time an ATH for this metric was recorded the price was at $4.51, the token’s highest at the time, Cointelegraph reported.

LINK’s mean dollar invested age is also “dipping in a big way” according to Santiment, indicating that longer term holders have begun taking profits.

Link deposits into crypto exchanges. Source: Santiment

Santiment posted on August 13 that the number of daily active addresses was at 20,800, five days after the ATH of 22,600.

Despite these signs, LINK has not lost its momentum yet – in fact, it now has a market capitalization of more than $6 billion.

New investors like Dave Portnoy of Barstool Sports, who recently became a crypto convert after meeting with the Winklevoss twins, could attract substantial interest.

What’s behind the LINK rally?

The price of LINK has risen more than 124% in the last two weeks alone, up to its current price from $7.74 on July 31.

Multiple factors could have contributed to LINK rallying to new all-time highs, from the squeeze of short contracts in the futures market to most recently demand from yield farmers trying to get their hands on YAM tokens — before the token tanked earlier today, Cointelegraph reported.

One of the strangest stories to emerge during the LINK rally has involved Zeus Capital. The investment firm has tried to scare off investors and allegedly offered crypto Twitter influencers payments to post negative comments about LINK. Why would it do that? It is believed the firm holds a massive short position on the token.

Newsweek coverage

One factor contributing to LINK’s meteoric rise is increasing mainstream awareness. Newsweek brought it to the attention of millions of potential investors in an article published on August 13: “While bitcoin remains the dominant force in cryptocurrency, a new offering called Chainlink is gaining steam – entering the top five tokens in terms of market cap and enjoying a surge of attention in the online community.”

Google Trends

Another indication of growing public interest can be found on Google Trends. There is an established correlation between Good Trends search numbers and a crypto’s future price action. The Chainlink search chart below shows a strong upward trajectory.

Image: Google Trends

It is very doubtful that Chainlink can replicate Ethereum’s stellar performance in the 2017 bull run – it rocketed from several dollars to $1,450 before it fell back to earth. That’s an extremely tough act to follow, but if it continues on its current trajectory, it will certainly be one of this cycle’s top performers.