Investors in Chainlink (CCC:LINK-USD) are once again seeing decent gains. The recent positive price movement comes after LINK introduced the Keepers upgrade to improve smart contracts and their features.
Keepers allow for automation of smart contracts, regular contract maintenance, and more help with decentralized DevOps capabilities.
LINK holders got hammered last week, and the price has now given back over 40% of the bounceback from its $14.95 low point in May. However, it is not just LINK that is suffering.
The entire crypto market has seen a reversal in fortune. However, there is hope that the launch of Keepers will lead to a rebound for Chainlink, which trades today around $23.50.
However, I am always in favor of speaking to the inherent utility of each altcoin before going to the technical outlook.
The logic is simple.
If there is a utility to the altcoin, it will progress despite short-term hurdles. On that end, Chainlink holders have a lot to be happy about. However, as is the case with most cryptos, invest the money you have to lose. Do not dedicate a huge chunk of your portfolio to this one.
How Is Chainlink Unique?
Sergey Nazarov, a technology entrepreneur, and Steve Ellis, a chief technology officer, created Chainlink in 2017. Chainlink Labs developed the blockchain and its novel token, LINK. It is a decentralized oracle network connecting smart contracts with real-world data.
Since its creation in 2017, LINK has had good days and bad days in equal measure.
We started this year at a trading price of $11.84. The cryptocurrency increased threefold and closed in March 2021 with a price of $29.35. It has lost some since but several analysts forecasting a minimum price of $50 for the year-end.
Why has this token done so well recently? Well, there are several reasons.
First, much like Bitcoin (CCC:BTC-USD), the broader crypto world is on fire. The positive price movement has eclipsed the highs of 2017 and then some. Although there have been hiccups along the way, the general trajectory is up.
Second, Chainlink first’s mover status has propelled the network to reach 500 integrations and have as many as 500,000 non-zero active wallets.
Chainlink has also benefitted immensely from the innovation of developers. The more they use Chainlink’s service to create new smart contracts, the more the price will surge because it powers the whole network.
Chainlink also provides features like serving as a layer for off-chain resources alongside the creation of smart contracts.
Chainlink has the first-mover advantage in the world of decentralized oracle networks. However, it does not have a monopoly. Protocols like Band, Decentralized Oracle Service, Decentralized Information Asset, Tellor, and NEST are decentralized oracle networks competing for the same users.
So this is not a one-horse race by any means.
The other major issue is Bitcoin. It is known that all cryptocurrencies are somewhat linked to the price movement for BTC. There is a good and bad to this relationship.
Bitcoin has generally been on an uptrend, but it is still one of the most volatile assets out there. Earlier this year, we saw an epic selloff. This was because China decided to ban all cryptocurrency-related financial transactions and Elon Musk making his displeasure known regarding the environmental costs of mining Bitcoin.
But then, we recently saw Bitcoin rise 10%. The reason? Elon Musk hinted that Tesla (NASDAQ:TSLA) might start accepting Bitcoin as payment again. If all of this is making your head spin, you are not alone.
But this is a very news-sensitive space. So, it does not matter what the latest upgrade is for Chainlink. If something is happening in the broader crypto space, we will see an impact on the price of LINK.
Offering technical analysis on any token is a difficult task. Why? Well, in the space of a few hours, everything can and will change. So, by the time this piece is published, it can go sideways for LINK in any way possible.
But still, it’s important to note that are seeing bullish activity for Chainlink. It has rallied alongside Bitcoin, resulting in an excellent 27% bounceback.
After a May 10 high of $52.99, LINK recorded a 70% price correction to land on May 23 low of $15, part of the broader crypto selloff. However, things became interesting when we saw a 130% rebound leading to the May 27 high of $35.36, but then the price corrected 40% from the May 27 high for a June 12 low of $20.02.
As I write this, LINK price is once again showing bullish trends. However, it does not mean the bulls are in control. Rather it can be considered a momentary respite offered by an Elon Musk tweet.
Currently, the tactically important trend line is the 200-day SMA at $26.45. If LINK can sustain its momentum at that price and breakout upward, we will have cause to rejoice.
Don’t Play With Money You Can’t Afford to Lose
Several analysts and experts have made strong predictions about Chainlink. Time does not permit me to get into all of these individually, but the feeling is almost unanimous: Chainlink can become one of the top cryptocurrencies.
As a result, LINK is a digital asset worth adding to your portfolio. But as I have noted throughout this article, the price has seen some wild oscillation within the last few months alone.
So, it would be best to initiate a small position and employ a watch-and-wait approach before adding more. Also, make sure to take regular profits. Don’t get burned too badly on account of price corrections.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.