Chainlink ETF: A Promising Development, But LINK May Still Struggle in December

Chainlink has emerged as a leading oracle platform, seamlessly connecting traditional finance with decentralized finance (DeFi). With the anticipated launch of Chainlink exchange-traded funds (ETFs) on Wall Street, many are left wondering: Can this positive development reverse the downturn in on-chain activity and price trends?

Key Takeaways

Grayscale is launching its first spot Chainlink ETF, which could attract institutional investors.
On-chain data shows a significant decline in Total Value Secured, falling from $103.21 billion to $80.5 billion in three months.
Historical trends indicate that LINK has closed in the red more than 60% of its Decembers since 2017.
Recent market volatility resulted in a 10% drop in LINK’s price, raising concerns about further declines.
Despite recent challenges, the upcoming ETF launch might provide temporary support to LINK’s price.

Chainlink ETF won't guarantee a LINK's green December - Here's why

Grayscale is set to launch its first spot Chainlink ETF, which could generate significant interest among traditional investors. However, current on-chain data reveals a decline in activity and a historical trend showing that December may not be a favorable month for LINK. Recent price fluctuations indicate the possibility of further declines, even with the positive hype surrounding the ETF.

Chainlink ETF Launching Soon

According to an update by Nate Geraci on X (formerly Twitter), Grayscale is preparing to launch the first-ever spot Chainlink ETF this week. This ETF is intended to convert Grayscale's private fund into a publicly traded investment, following approval from the US Securities and Exchange Commission (SEC). As a result, increasing interest and demand from institutional investors could enhance liquidity and capital inflow for LINK.

Chainlink ETF

By offering traditional investors access to Chainlink, this ETF could potentially increase demand. However, it’s important to note that this development occurs amidst a backdrop of declining on-chain activity and lackluster price performance.

On-Chain Data Indicates Potential Red Month

Recent on-chain metrics reveal a downward trend, with the Total Value Secured (TVS) dropping significantly from $103.21 billion to $80.5 billion over just three months. This metric accounts for all deposits related to borrowed funds and smart contracts linked to Chainlink, as reported by Chainlink Metrics.

LINK

Despite the buzz from the ETF launch, historical data suggests December may contribute to further losses for LINK. In fact, since its introduction in 2017, LINK has experienced more than 60% of its Decembers closing in red, with only three occurrences of positive returns. Notably, low performance in November typically indicates a continuation of similar trends into December, with the exception of its inaugural year.

LINK

Compounding these concerns is LINK’s persistent decline since September.

LINK Faces 10% Decline: What's Next?

Recent hourly price charts show a fragile state for LINK, recently experiencing a 10% crash coinciding with broader market downturns. The price dropped below an ascending trendline prior to this decline. According to analysts like Ali Charts, LINK might retest a breakdown from the rising channel in which it has been trading since July 2024, predicting further price drops that could take LINK down to around $8.

LINK

Nevertheless, the hype surrounding the upcoming Chainlink ETF by Grayscale could shift this outlook. Increased capital inflow and enhanced liquidity might help counterbalance the price decline, which has already seen a reduction of 6% on the first day of December.

Conclusion

While the Grayscale Chainlink ETF launch is an exciting prospect that may attract institutional investments, the current indicators and historical trends suggest that LINK may face significant challenges in December. Investors should approach the coming weeks with cautious optimism, keeping an eye on market movements and on-chain data to guide their decisions.