A once high-flying cryptocurrency is soaring again. But should you buy it?
Over the past 90 days, Chainlink (LINK 1.44%) has soared in value. During that time period, the price of Chainlink is up 79%. As a result, Chainlink is now outperforming even Ethereum (CRYPTO: ETH), which became a crypto market darling during the summer.
So, if you’re looking to put $500 to work in the cryptocurrency market, one possibility could be Chainlink. Here are three good reasons to give this high-risk, high-upside cryptocurrency a closer look.
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Chainlink is literally the “smartest” cryptocurrency you can buy
In crypto parlance, Chainlink is a blockchain oracle network. This just means that Chainlink feeds real-world data and information to blockchains whenever they request it. This can play a very important role in the financial markets, where real-time data is paramount. But there’s plenty of other real-time data that’s of interest to people around the globe. Think about real-time weather data, or even real-time sports data.
Suffice it to say, blockchains are constantly pulling in real-time data, and Chainlink is far and away the market leader in this category. It currently has a 67% share of the blockchain oracle market, and no other crypto even comes close. The next closest competitor is Pyth Network (CRYPTO: PYTH), with a 13% market share.
What’s interesting here is that new use cases keep getting discovered for Chainlink. In August, for example, the Trump administration announced plans to deploy verifiable, real-time economic data across Chainlink. Stats about GDP and inflation, for example, will now flow from the U.S. Bureau of Economic Analysis (BEA) directly to Chainlink, where it can then be distributed to blockchains. From there, financial market participants can integrate this data into blockchain smart contracts.
Chainlink could have 10x upside potential
The really existing part about Chainlink is that it could have 10x upside, potentially making it a $250 crypto. The major catalyst here is real-world asset (RWA) tokenization, which some experts think could become a $16 trillion to $30 trillion industry by 2030. In short, there’s potentially big business in transforming real-world assets (such as stocks and bonds) into crypto tokens that can be traded on a blockchain.
That’s where Chainlink enters the picture. Think of Chainlink as the middleman providing all the pricing and market data needed to create and trade those digital tokens. There needs to be a trusted, standardized source of data, and Chainlink could provide it as the world’s premier blockchain oracle.
To ensure that tokenized assets can be easily moved, swapped, and transferred across different blockchains once they’ve been created, Chainlink has also created a new protocol called CCIP (Cross-Chain Interoperability Protocol). This is a huge development, because it means digital tokens can be moved across a variety of different blockchains, without any extra work by the end user.
In terms of usefulness and importance, some have compared Chainlink’s CCIP to the internet era’s famous TCP/IP (Transmission Control Protocol/Internet Protocol). Without getting too deep into the weeds, TCP/IP is a communication protocol, ensuring that data can be moved across the internet easily and efficiently to the right addresses.
Potential watch-out signs for Chainlink
Of course, we’ve seen this story before with Chainlink. Back in 2020-2021, when decentralized finance (DeFi) was all the rage, Chainlink became an instant market darling. As the premier data oracle for blockchains, Chainlink grew in prominence during the explosion of interest around DeFi.
Blockchain smart contracts seemingly had an insatiable appetite for real-time data and information, and investors were willing to pay a huge premium for Chainlink. The world of DeFi looked like it was going to change Wall Street forever. But after hitting an all-time high of $52 in May 2021, Chainlink collapsed in price.
So could the same thing happen again? Absolutely. In fact, with Ethereum soaring in value during the summer, and all the new buzz surrounding Chainlink, it feels like the setup for a repeat of what happened four years ago. To paraphrase Winston Churchill badly, this might not be the end of the beginning, but the beginning of the end.
With that warning in mind, if you are looking to 10x your money, Chainlink offers some attractive upside potential. For a modest upfront investment of $500, you could pick up 20 Chainlink tokens (priced at about $25 each). Buying the “smartest” cryptocurrency at today’s bargain prices might just end up being the smartest investment you ever make.