Chainlink (LINK) pumps 26% in 6 days — Is there room for more?

If you're a cryptocurrency enthusiast, you've probably been following the recent surge in Chainlink's LINK token. In just six days, LINK experienced a remarkable 26% increase, reaching $14, a level not seen since April 2022. This surge has solidified its position as the 10th largest cryptocurrency (excluding stablecoins) by market capitalization.

While traders are celebrating this price action, it begs the question: is Chainlink's current valuation of $8.1 billion justified? In this article, we'll take a closer look at the reasons behind LINK's surge and assess the sustainability of its current rally.

Spot Bitcoin ETF expectations and real-world asset tokenization boost sentiment

The confidence of cryptocurrency traders has been boosted by a recent research note from Bloomberg's exchange-traded fund (ETF) strategists. They believe there is a 90% chance of spot Bitcoin ETF approvals by January 10. This news has created a wave of anticipation among traders, and the positive sentiment has extended to altcoins like Chainlink.

But the surge in Chainlink's price isn't solely due to ETF expectations. Real-world asset tokenization is also contributing to the positive sentiment. HSBC recently launched custody services for tokenized securities, a move that signals the increasing demand for digital assets. These developments indicate that RWA tokenization is becoming mainstream, and Chainlink's oracle solution is in a favorable position to benefit from this trend.

Professional traders' increased demand for LINK token

While institutional inflows into Chainlink cannot be directly measured, Grayscale's Chainlink Trust (GLNK) offers an optimistic perspective. Despite having relatively modest assets under management, GLNK is traded through regular stock market brokers, making it accessible to asset managers who cannot invest directly in cryptocurrencies. The fact that GLNK is trading at a 320% premium compared to the proportional underlying LINK holdings held by the fund suggests strong buying demand.

In addition, the listing of LINK on the HashKey exchange has further fueled Chainlink's surge. This licensed trading platform in Hong Kong caters to professional investors and is affiliated with HashKey Capital, a prominent digital asset venture investment firm.

Furthermore, Chainlink's surge is supported by increased network activity. Recent on-chain metrics show a rise in transaction count, indicating growing interest and usage of the platform.

While some criticisms have been raised about Chainlink's excessive centralization, its dominance in the oracle market remains unchallenged. With the potential for further tailwinds in the RWA market, it's likely that LINK's price will continue to rise.

It's important to note that this article provides general information and should not be considered legal or investment advice. The views and opinions expressed here are solely those of the author.