Chainlink (LINK) has been one of the most successful cryptocurrencies in recent years, with a 1,530% increase from $0.30 at the beginning of 2019 to $4.89 currently. Also, Chainlink (LINK) has been surging since the March crypto crash and has climbed 165% in just a few months, so Chainlink (LINK) is very popular among crypto traders right now.
However, crypto traders should be wary of holding Chainlink (LINK), since it has an extremely centralized supply and is prone to centralized dumping.
First off, here is some brief background on Chainlink (LINK). It is a platform which offers advanced smart contract technology which can be used for a variety of applications. There are many other cryptocurrencies which offer similar smart contract technology, but apparently Chainlink (LINK) is the most popular.
However, regardless of how cutting edge and useful Chainlink’s (LINK) technology is, it has a circulating supply of 350 million tokens, but there are 650 million tokens which have not been distributed yet. Apparently out of these another 350 million will be distributed among node operators, but as of this writing there is no clear plan yet for this distribution and it hasn’t happened so these 350 million tokens remain with the company which founded Chainlink (LINK). Further, a whopping 300 million tokens are fully owned by the company behind Chainlink (LINK).
Thus, although Chainlink (LINK) may have a market cap of $1.7 billion at this time, and an impressive trading volume of $500+ million per day, the company behind Chainlink (LINK) has far more tokens under their control than the entire circulating supply.
This situation leads to centralized dumping, and considering the amount of tokens that the company holds, this centralized dumping will continue for the long term. This both suppresses Chainlink’s (LINK) price, and can lead to rapid market crashes.
Indeed, market data shows that Chainlink (LINK) has seen no less than 3 devastating crashes so far, in the summer of 2019, once again towards the end of 2019, and when the Coronavirus rocked the crypto markets in March.
Thus, Chainlink (LINK) has a history of pumps which lead to epic dumps, and it seems that history will inevitably repeat itself due to the extremely centralized nature of Chainlink’s (LINK) supply. Therefore, crypto traders should be very wary of holding Chainlink (LINK), even if it is one of the hottest altcoins right now.