A Wall Street (Crypto) Analyst’s Take on ChainLink: Crypto Long & Short

On a technical basis, LINK prices have been in an uptrend since June 20, following a 40% decline between April 19 and June 19.

Prices have appreciated approximately 5.7% since its 10-period moving average crossed above its 100-day moving average on July 13. In prior times such a crossover has occurred, LINK has gained 16.4% on average over the next 30 days.

Its current RSI of 59 has, in the past, preceded 30-day increases of 11.6% historically.

ChainLink has seven primary areas of focus:

Proof-of-Reserves may not be all that it’s cracked up to be. As reported by CoinDesk’s Sam Kessler, ChainLink’s PoR offering relies heavily on self-attestation. That means projects using the PoR service provide the reserves data. It’s not difficult to see where the potential for conflicts of interest may arise.

To ChainLink’s credit, they are forthright about this on their website. Additionally, they require that attestation methods be publicly disclosed.

The general public may miss this fact, however, which could cause reputational concerns for ChainLink if the attestations are faulty, even if ChainLink isn’t to blame.

Technically, LINK has a long way to go as its price remains a great deal away from its all-time high of $52.

Despite the recent crossovers and current RSI, prices have retraced over the most recent three days, indicating short-term profit taking. Sans a new catalyst, there may be a dearth of new buyers entering the market for LINK.

Finally, LINK’s most-recent breach of its upper Bollinger Band indicates that prices could retrace as well.

XXX: Look, nobody can reasonably look at dogecoin (DOGE) and say, “Yeah, that’s how money normally works.” And for some people, that’s the good news. They want this – a currency (and affiliated sports car) emblazoned with a dog’s face. For everyone else, even people amped up about crypto’s future, the appeal of a meme coin like DOGE is tiny, at best. And, yet, you can make a case that the future of DOGE is the future of crypto as a whole. CoinDesk’s Helene Braun kinda makes that argument here, noting that Elon Musk overhauling Twitter – turning it into an everything app called X – could be good news for crypto. Musk loves DOGE and you’d have to be asleep to not notice he likes doing outrageous things. Making DOGE and other cryptocurrencies an integral part of his planned payments platform feels like a natural move for him. And maybe that drives crypto toward the elusive goal of mainstream adoption.

FED UP: Moving money from point A to point B in the U.S. is bizarrely slow compared with how it works elsewhere. Americans still sometimes write paper checks! (Crypto could improve that, but much of Washington seems opposed to embracing crypto, so let’s ignore that for now.) The Federal Reserve just (finally) opened its FedNow service that promises instant payments. Some crypto fans worry about this. They view it as a gateway to a digital dollar that could impede crypto’s growth in the U.S. Officially, the Fed downplays any link, publicly anyway. Guess we’ll see.

DEFI DEAD? Talk to people who build and think about market infrastructure (the geeks – like me – call it “market structure”), and they get real excited about DeFi. It’s a sandbox where they can, in theory, build a whole new way of doing markets and finance. (I wrote an article that addressed this in my prior life at Bloomberg.) With the caveat that this bill likely is going nowhere fast, here’s a story about a new U.S. Senate bill that seeks to regulate DeFi like it was a bank. That doesn’t have to be a disaster for DeFi, but a clampdown could threaten the decentralized ethos of decentralized finance. Remember, the whole point of DeFi is you write some code that lets people do finance-y stuff in a relatively lightweight manner. But imagine how bogged down that gets if stringent regulations are dumped on top of it. Undermines the appeal, doesn’t it? Separately, though maybe relatedly, DeFi volumes are at seven-month lows.