Quick take:
- Timothy Peterson has forecasted that Chainlink could increase by a factor of 3 or more between now and the end of the year
- He explains LINK is fairly valued unlike Bitcoin and Ethereum that are in bubble territory
- Chainlink increasing by a factor of 3x brings its value to around $66
Bitcoin and crypto analyst Timothy Peterson of Cane Island Alternative Advisors has forecasted that Chainlink (LINK) could increase in value by a factor of three or more between now and the end of the year. Mr. Peterson shared his analysis of Chainlink via the following statement on Twitter which pointed out that LINK had the least downside risk compared to Bitcoin, Ethereum and XRP.
I think $LINK is a 3x+ between now and Dec. I don’t see that happening with #bitcoin, $ETH, $XRP. Maybe $DOT can. Some others may do better than #ChainLink, but of all these, Link is what I have most confidence in and with the least downside risk.
His forecast of Chainlink was an addition to an earlier tweet whereby he had categorized LINK as ‘fairly valued’ Bitcoin and Ethereum exhibiting ‘bubble’ characteristics. His initial tweet on LINK can be found below.
#ChainLink is fairly valued. There's a bubble in #bitcoin and #ethereum that is not present in $LINK. pic.twitter.com/uBy6XiKLRe
— Timothy Peterson (@nsquaredcrypto) January 23, 2021
3x Might Be a Conservative Estimate for Chainlink
At the time of writing, Chainlink is trading at $22.37 as it attempts to defend the $22 support area ahead of the monthly close only hours away. Taking the latter value, a 3x increment of Chainlink puts LINK at $66 by December of this year.
Using Chainlink’s 2020 performance as a template, the estimate by Mr. Peterson seems conservative given that LINK did 10x between January (average price of $2) and August 2020 when it set an all-time high of $20.
Furthermore, the DeFi industry is expanding at an exponential rate with many of the protocols using Chainlink for their price feeds. A quick glance at the Chainlink ecosystem reveals that a total of 404 DeFi and Crypto projects have integrated Chainlink technology in one form or another.
To note is that LINK is at the core of the Chainlink network with three functions outlined below.
1) a utility token where users must pay Chainlink nodes in LINK for oracle services,
2) a subsidization mechanism similar to a block reward to support the early costs of oracle networks until they reach self-sustainability, and
3) a form of crypto-economic security wherein nodes stake LINK as collateral (security deposit) to back the honest and reliable performance of their oracle services.
Therefore, as the Chainlink ecosystem grows, the demand and usage for LINK will also increase. As a result, the price of LINK will continue to increase based on the simply supply-demand dynamics. The only probable obstacle for Chainlink exceeding a 3x increment this year, is an unstable Bitcoin dropping to $20k or lower.