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Chainlink Price Eyeing $20 After Cross-Chain Transporter Bridge Unveiled

Published April 12, 2024 9:52 AM
Valdrin Tahiri
Published April 12, 2024 9:52 AM

Key Takeaways

  • Chainlink introduced its new cross-chain bridge, Transporter, on April 11.
  • The LINK price has fallen since reaching a high of $22.86 on March 11.
  • Can LINK revisit its previous highs, or will the price correct in April?

Chainlink is blockchain’s leading decentralized oracle provider, holding over 45% of the Total Value Locked (TVL)  from all oracles. On April 11, it announced its cross-chain  bridge called Transporter, with the aim of providing security in an area that desperately needs it. Bridge hacks account for almost 50%  of all the value hacked in the blockchain industry.

The LINK price bounced at an ascending support trendline on April 10. It attempts to break from a short-term descending resistance trendline. Despite the possibility of a breakout, there are concerns about the direction of the long-term trend.

What is Transporter?

Transporter is Chainlink’s new cross-chain bridge , which will be available on Ethereum, Optimism, Arbitrum, Polygon, Avalanche, Base, BNB Chain, and WEMIX. The bridge is built on top of Chainlink’s Cross-Chain Interoperability (CCIP) technology and marks Chainlink’s first foray into blockchain bridges.

As outlined before, bridge hacks are extremely common in the blockchain industry. In 2022, the bridge for Ronin, the most popular gaming sidechain, was hacked  for $624 million. This is the biggest crypto hack to date.

Bridges become an attractive target for hackers since they often have a central storage point, which then becomes the objective. Numerous projects such as Wormhole  on Solana have attempted to tackle this issue recently and provide a secure bridging mechanism.

Transporter aims to tackle the issue of security and provide an easy-to-use interface. It will also be inexpensive since the user will only pay the standard CCIP fee which is 0.063% when paying with LINK tokens.

The CCIP secures all Transporter transfers . It contains multiple decentralized node networks, configurable rate limits and comprehensive audits. The interface will give users real-time updates on the status of their tokens and will provide optimizing pricing for transfers.

In its Mainnet , the CCIP used two token transfer methods:

  • Burn and Mint – Tokens are burned on the source chain and the same number of tokens are minted on the destination chain.
  • Lock and Mint – Tokens are locked in the source chain and wrapped tokens are minted on the destination chain. Then, these tokens can be burned to unlock the tokens on the source chain.
Lock and Unlock Mechanism
CCIP Mechanisms | Credit: X

Transporter will introduce  a new token transfer mechanism called “lock and unlock”. With this mechanism, tokens are locked in the source chain and the equivalent number of tokens are unlocked in the destination chain.

For example, in a cross-chain transfer between Ethereum and Arbitrum, ETH is wrapped to WETH and locked, while WETH is unlocked on Arbitrum and then unwrapped to ETH.

LINK Price Prediction: Bounce Before Correction?

The daily time frame analysis suggests the LINK price has completed a five-wave upward movement (white) and is now correcting. Since the upward movement lasted for 266 days, it is likely the correction will be lengthy and extensive.

A potential target for the bottom of the correction is at $13.80. A horizontal support area and the 0.5 Fib retracement support level create the target.

LINK Daily Wave Count
LINK/USDT Daily Chart | Credit: TradingView

Despite this bearish outlook, the short-term trend could still be bullish. This is because LINK bounced at an ascending support trend line and could break out from a resistance (dotted) to complete the B wave near $21. Then, the price can begin the final portion of its correction toward $13.80.

A breakdown from the support trend line will instead indicate the C wave has started and the LINK price can fall toward $13.80.

LINK’s Correction Might Not be Complete Yet

The release of Transporter is a positive development for both Chainlink and the blockchain industry. Chainlink’s security could be essential in fortifying the blockchain bridging infrastructure, which has been the most susceptible to crypto hacks.

Despite this positive development, the LINK price is likely still correcting and will continue its descent after a short-term bounce toward $21.

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