Chainlink (LINK), the oracle-focused blockchain protocol, surpassed Bitcoin Cash (BCH) to become the eighth-biggest cryptocurrency as of Jan. 18.
The market capitalization of Chainlink now hovers at $9 billion and roughly $500 million away from the next biggest crypto asset, Litecoin (LTC).
Why is Chainlink surging so rapidly?
The price of Chainlink rose by 13% in the last 24 hours and the momentum of LINK likely comes from the positive sentiment around DeFi.
The DeFi market as a whole has been rallying strongly throughout recent months with AAVE and SUHI being the most recent standouts. The uptrend can be attributed to the fast-growing metric called total value locked (TVL), which measures the amount of capital deployed across DeFi protocols.
As of January 18, the TVL across DeFi protocols is estimated to be around $24 billion and it is still rapidly growing.
Chainlink benefits from the growth of the DeFi space because oracles feed DeFi protocols with crucial market data.
When DeFi protocols, such as lending platforms or exchanges, fetch price data, they get it from oracles like Chainlink and Band Protocol.
As such, when there are generally more users in the DeFi market, oracles benefit from the increasing TVL of the DeFi market.
Where does LINK go next?
On-chain analysts at Santiment found that dormant tokens are continuing to move. This trend has further fueled the bull trend of various cryptocurrencies, including Bitcoin, Ether and LINK. They said:
“Dormant tokens continue to be moved at rapid rates during this #crypto bull run, and dips in our ‘Mean Dollar Invested Age’ metric indicate the increased rate of $BTC, $ETH, $LINK, $LTC, and particularly $REN (which triggered its massive +60% week).”
With LINK surpassing an all-time high, it is now technically in “price discovery.” In technical analysis, price discovery happens when the value of an asset exceeds its record-high and begins searching for a new ceiling.
In addition to the positive technicals of Chainlink, the oracle provider also does not have many competitors apart from Band Protocol, which is based on the Cosmos blockchain network.
The network effect of Chainlink would likely act as another catalyst in the foreseeable future, especially as Ethereum (ETH) continues to dominate the DeFi space.