An On-chain view of Chainlink after last month’s price hit
Depending on where you look for it, Chainlink (LINK) has positioned itself as one of the top 15 cryptocurrency projects in the world with a current Market Cap of approx. $1.11b and reported trading volumes of around $720 million over 24 hrs. Performance wise, LINK was having an amazing early 2020 run just until the COVID-19 hit world markets, reaching an All-Time-High (ATH) of around $4.95 on March 4, which would have meant a Year-to-Date (YTD) performance of 178%.
However, that didn’t last long as the crisis worsened and investors rushed in massive sell-offs that took LINK’s price to the $1.5 level and erasing more than 2/3 of its value in less than a week. Nevertheless, and in spite of the ongoing crisis, the price of Chainlink has then recovered to $3.29 with a current YTD performance of around 77%.
Therefore I’d like to steal around 10 minutes of your time and show you how Chainlink looks when seen through the IntoTheBlock analytics platform after March’s disastrous crash.
But first
Let’s borrow a quick description of Chainlink from IntoTheBlock’s CEO — Jesus Rodriguez — when he published a first On-Chain analysis on LINK’s status with data from our platform back in 2019.
“Chainlink is not a general-purpose cryptocurrency but rather a programmable token that focuses on one of the biggest use cases for decentralized applications (DApps): integration.”
In other words:
“Chainlink is a protocol to streamline the integration of external data into smart contracts. The core principles of the Chainlink protocol are based on the concept of blockchain oracles that combine the immutability of the state of the blockchain with the relevance of external data for on-chain smart contracts.
The core architecture of Chainlink is based on four fundamental components: External Data, Chainlink Node, External Adapter, Blockchain Node.”
Therefore:
“LINK tokens are the underlying currency of all the integration processes in Chainlink.”
So without further due, let’s dig into some of the most curious On-Chain facts that Chainlink presents after going through March’s price drop.
The majority of LINK holders are in good shape
The “Global In/Out of the Money (IOM)” indicator reveals three important metrics:
1. 73.22% of all addresses with a balance are In the Money.
2. About 7.5% of holders are At the Money (breaking even).
3. Only 19.24% are Out of the Money.
We are able to do this analysis by running Machine Learning algorithms that average all positions of current LINK holders and organizes it into its’ 10 most significant groups, while comparing them against the current price.
We are also able to see that although the price of LINK bounced several times between the $2 — $2.6 mark, it managed to push through those levels and there’s significant support on three big clusters of addresses that are holding around 69m LINK tokens.
Large Transactions are trending upwards
At IntoTheBlock, we have always talked about the importance of tracking “Large Transactions” (those larger than $100k) as a good indicator for price movement and we have seen this correlation happening to a high degree since we added this indicator to our current portfolio of more than 60.
After a significant increase in Large Trxs in the first two weeks of March, which signaled worldwide sell-offs, the number of Large Transactions bounced back and forth during a period of price stabilization. Fortunately, they are coming back to an upward trend as investors rush to trade the asset heavily.
Everyone wants to join the party
For the following section, I’ll be joining two of IntoTheBlock’s categories of indicators to show that, in spite of the crisis previously described, not only the Chainlink network has continued to have a healthy growth, but that investors believe in the project and continue to support it by actively trading and holding LINK tokens.
1. “Addresses Stats” reveal positive net network growth: Considering the difference between New Addresses being created and Zero Balance Addresses (those addresses going to zero balance per day), IntoTheBlock is able to create and track a real measure of Net Network Growth.
Specifically for Chainlink, the number of Zero Balance Addresses reached significant levels back on March 20 after the big price drop. However, these didn’t get to surpass the number of New daily Addresses. For the chart below, it’s a positive sign to see that the blue line always stays above the yellow line, and so not only has that been true for the last month on Chainlink, but the gap between these two lines has widened significantly since the start of April.
2. “Ownership by Time Held” indicators reveal strong backing of the project: Two charts are important here:
a. Traders: Number of addresses with holding periods of less than 30 days.
It’s a good indication of money flows and since the crisis took place, we have been able to observe how this number has increased drastically as investors rushed to trade the asset more actively to take advantage of the volatility.
b. Cruisers: Number of addresses with holding periods between 1–12 months.
It’s a great indication of trust and support for the project, specifically for recent events. Correspondingly, LINK has very strong numbers and as you’ll be able to observe in the image below, the trendline of addresses holding their assets between 1–12 months is growing with a linear behavior.
Good gains means good PR
The general sentiment of Chainlink agrees with what investors experience in their pockets. Taking a look at IntoTheBlock’s “Social” indicators exposes a picture that is very optimistic from different perspectives.
Telegram
· Sentiment: We run ML models that quantify the affective states of textual data on a selective set of Telegram groups/channels with either positive, neutral, or negative connotations. This is a tough problem since most messages are plagued with incoherent, poorly written and biased texts, but nevertheless there’s a significant difference of positive messages over the negative ones.
· Number of Members on the official Group: It’s a simple metric to follow that shows support from the community as more and more members join the official Telegram group of Chainlink.
· Sentiment: In a very similar fashion than Sentiment for Telegram, Twitter portraits a major difference between positive and negative tweets, with a noteworthy increase in the past days as the price of LINK has continued to recover.
Github
· Activity: With a special focus on Contributions, Watchers, Stars, Open Issues, Size of the project in Kilobytes, and the number of Forks; our Github metrics show that Chainlink has strong support from the developer community.
Conclusion
IntoTheBlock’s indicators provide an accurate view of the status of Chainlink through these difficult times with tons of On-Chain data that only shows positivism for the asset. That, and the added benefit of Chainlink’s ability to have really strong partnerships of the likes as Google, Oracle, Town Crier, Aelf, Binance, and Celsius Network, amongst others, are certainly a major bullish sign that most investors won’t miss in the coming months.
Head down to IntoTheBlock and try our free trial to keep up to date with Chainlinks’ status from a data-centric standpoint.
