LINK Crypto May Rise As Chainlink Becomes More Popular With NFTs
Chain link (CCC:LINK-USD) has had a volatile year so far. After closing at $ 11.87 on December 31, LINK crypto is now at $ 22.26 at the start of September 22, 2021. This means its year-to-date performance (YTD) is almost double (that is i.e. + 87.5%).
However, in 2021, Chainlink went on a roller coaster ride. It peaked at $ 52.20 on May 8, then fell like a rock to $ 13.78 on July 19. Subsequently, LINK rose again 61.5% to $ 22.26 on September 22. Chainlink is now the 15th largest crypto, according to Coinmarketcap.com, with a market value of just over $ 10 billion ($ 10.1 billion).
Correlation of Chainlink with Ethereum
Its performance is also strongly correlated with Ethereum (CCC:ETH-USD), the second largest cryptocurrency with a market cap of $ 336 billion at the start of September 22. For example, Ethereum is up around 294% year-to-date, but since its recent low also on July 19, it is up 61% to $ 2,877 as of the start of September 22. This is similar to crypto LINK’s 61.5% peak since the same low date.
Part of the reason for this correlation is that the developers are looking to make Chainlink a large smart contract blockchain network, just like Ethereum. Ethereum is the largest smart contract platform to date. It contains the most Defi applications (decentralized finance) and other Dapps (decentralized applications). They are basically smart contracts that do not require a bank, brokerage firm, or any type of fiduciary to implement investor transactions and activities.
Its smart contract functions
Chainlink also focuses on smart contracts. Chainlink protocols are based on Ethereum blockchain software. Chainlink Laboratories is a non-profit foundation focused on promoting Chainlink’s smart contract capabilities with different applications and businesses.
Chainlink is an “oracle” platform. Blockchain oracles provide specific external electronic data designed for use in specific smart contracts. Smart contracts need this “oracle” data to run their applications.
For example, here’s how Chainlink Labs describes the function of Chainlink and focus:
“Securely connect smart contracts with off-chain data and services. Oracle decentralized Chainlink networks provide tamper-proof input, output, and computation to support advanced smart contracts on any blockchain.“
Additionally, Chainlink is now gaining a reputation as a viable platform to develop NFTs (non-fungible tokens). According to a tweet on Twitter (NASDAQ:TWTR), Chainlink can now provide a competitive and dynamic advantage to NFT developers looking to build popular NFT marketplaces.
They are like trading sites for NFT owners in specific industries or hobbies. NFT marketplaces are gaining popularity to allow people to buy and sell NFTs in the art, music and video industries. Chainlink Labs wants Chainlink to take a significant market share in creating NFT marketplaces by using its security and fast transaction features as drawing points.
For example, a new art-driven NFT market called Polkally announced that he was going integrate Chainlink into its NFT marketplace. He wants to use Chainlink’s ‘oracle’ feature to provide continuous and external cryptocurrency price feeds in the NFT marketplace.
Where that leaves investors in LINK Crypto
The correlation between Ethereum and Chainlink is actually higher than you might think. For one, as a recent author points out, “Ethereum cannot use real world data on its blockchain, isolating it and limiting the potential use cases it has.”
On the other hand, Chainlink can “connect the real world with the Ethereum blockchain, making it usable for businesses and institutions outside the crypto space.”
This means that the price of the LINK crypto will continue to have a huge correlation with Ether tokens, at least in terms of absolute performance going forward. Additionally, since Chainlink has a lower price base, it is possible that investors in the LINK crypto will end up with a higher absolute performance over time. Watch Chainlink, especially at times like right now as cryptos are trading lower.
As of the publication date, Mark R. Hake has a long position on Ethereum but no other securities mentioned in the article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.