Chainlink (LINK), a prominent oracle service provider, has recently enjoyed a significant surge in its price, surpassing $8 in the past week. However, the rally appears to be losing steam, with LINK currently undergoing a notable retracement, dropping by 4% in the last 24 hours.
As of the time of writing, LINK is trading at $7.60, with a market capitalization of $4.2 billion. Notably, the trading volume for Chainlink has increased by 20% to reach $370,072,812.
During its recent price rally, Chainlink exhibited a strong correlation with Bitcoin, which often influences the broader cryptocurrency market.
Analyzing Chainlink’s On-Chain Data
Market analysts have been closely monitoring Chainlink’s on-chain data to assess its price outlook. One crucial metric being observed is the Market Value to Realized Value (MVRV) ratio, provided by Santiment. MVRV is a valuable gauge for identifying potential market tops and bottoms. A high MVRV suggests the possibility of a peak, while lower values indicate accumulation phases.
Market analyst Ali Martinez highlights data from @santimentfeed, pointing out that historical data indicates significant corrections in Chainlink’s price when its MVRV 30D exceeded 19%. Presently, Chainlink’s MVRV 30D has reached 20%, suggesting a potential short-term correction before any further upward movement in its price.
Price Support and Potential Downside
If Chainlink’s price fails to find reliable support at the $5.565 level, it may decline further, possibly establishing a new low and triggering selling pressure below this critical level.
Prominent market analyst Michael van de Poppe has even suggested the possibility of a further retracement to $7 for Chainlink.
Chainlink’s New Offering: Data Streams
On October 2, Chainlink introduced a groundbreaking product known as “Data Streams.” This new offering is designed to address network latency issues and enhance the efficiency of blockchain applications.
Chainlink Data Streams leverages low-latency market data and automated execution to enable the creation of ultra-fast and user-friendly derivatives products. “Low latency market data” refers to financial information delivered with minimal delays.
This innovative product adopts a “pull-based” data oracle approach, where high-frequency market data is consistently provided off-chain. For every block, oracle reports are generated, allowing users to retrieve them off-chain and validate them through their on-chain transactions.
Moreover, this approach differs from the traditional “push-based” method in which oracles proactively feed data to smart contracts at varying intervals.
By employing a pull-based system, Chainlink Data Streams effectively mitigates latency challenges, also reducing the time required for data packets to move between different points. This is particularly crucial in distributed networks, where message propagation among nodes often results in transaction delays.
Chainlink Co-Founder Sergey Nazarov’s Insights
Chainlink’s co-founder, Sergey Nazarov, emphasized the significance of Data Streams, stating that it enables decentralized finance (DeFi) protocols to achieve execution speeds and user experiences comparable to centralized exchanges without compromising on the core principles of Web3, which also include fairness, transparency, and decentralization.
In summary, Chainlink’s MVRV ratio indicates the potential for a short-term price correction before any further upward movement, while the introduction of Data Streams aims to enhance the speed and efficiency of blockchain applications by addressing network latency issues.