The market capitalization of the Chainlink has exceeded Bitcoin Cash as the DeFi market continues to thrive, with total allocated value exceeding $24 billion.
Chainlink exceeds Bitcoin Cash making LINK the 8th largest crypto and NOTICS in the market
Chainlink (LINK), the blockchain protocol focused on oracle, has surpassed Bitcoin Cash (BCH) to become the eighth largest cryptomeda as of January 18.
Chainlink’s market capitalization now stands at around $9 billion and about $500 million from the next largest crypto asset, Litecoin (LTC).
1-day LINK/USDT (Binance) chart. Source: TradingView.com
Why is Chainlink growing so fast?
The price of the Chainlink has risen 13% in the last 24 hours and the LINK dynamic probably comes from the positive feeling around DeFi.
The DeFi market as a whole has had a strong bullish rally over the last few months with AAVE and SUHI being the latest highlights. The upward trend can be attributed to the fast growing metric called total allocated value (TVL), which measures the amount of capital deployed in DeFi protocols.
On 18 January, TVL among the DeFi protocols was estimated at about US$24 billion and is still growing rapidly.
Total amount allocated in Defi. Source: Digital Assets Data
Chainlink benefits from the growth of the DeFi space because oracles feed crucial market data into DeFi protocols.
When DeFi protocols, such as loan platforms or exchanges, search for pricing data, they get it from oracles such as Chainlink and Band Protocol.
As such, when there are usually more users in the DeFi market, oracles benefit from the growing TVL of the DeFi market.
What comes next?
Analysts from Santiment’s network have discovered that inactive tokens continue to move. This trend has further fuelled the upward trend of several cryptomaps, including Bitcoin, Ether and LINK. They said:
“Inactive tokens continue to move at fast rates during this bullish run, and drops in our ‘Average Dollar invested’ metric indicate an increased rate of $BTC, $ETH, $LINK, $LTC and particularly $REN (which triggered their week with massive increases of over 60% appreciation). ”
With LINK surpassing its historical maximum, it is now technically at “price discovery”. In technical analysis, price discovery happens when the value of an asset exceeds its previous ATH and starts looking for a new ceiling.
In addition to the positive technical aspects of Chainlink, the oracle provider also does not have many competitors beyond Band Protocol, which is based on the blockchain Cosmos network.
The network effect of Chainlink would probably act as another catalyst in the foreseeable future, especially as Ethereum (ETH) continues to dominate the DeFi space.