Is Fear of a Chainlink SEC Lawsuit Reason Why LINK Drops?

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Last Updated on 26 December 2020 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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One of the more remarkable stories of the month of December in the cryptosphere seems to be the demise of Chainlink, the DeFi coin that at a certain point this year ranked 5th on CoinMarketCap. By now, it is at risk of falling out of the top 10.

As the DeFi hype blew over as the summer faded and attention turned to Bitcoin instead, Chainlink started to see its value drop. When a death cross was entered into its trading chart versus Bitcoin on 10 December, the fall seemed to fasten.

Now that eternal nemesis Zeus Capital claims that the SEC (who just started a massive lawsuit against Ripple and it’s coin XRP) will go after Chainlink next, the coin seems to drop ever faster. We explain what is happening.

Advertentie.

DeFi summer

First off, let’s not forget that Chainlink started trading on 1 January at around $2. To be at $11 at the end of the year is of course quite the achievement and an incredible return on investment.

Secondly we must admit that the DeFi hype has somewhat died by now after the summer ended and attention turned to Bitcoin but are also quite sure that as soon as the DeFi Blue Chips have all got their affairs in order, chances for a further rebound of DeFi and institutional interest could indeed be next in 2021.

Death Cross

From a technical perspective, Chainlink broke out of its long term rising channel at around 10 December when it posted a death cross on the LINK / BTC chart, the first one since 2018 in fact, meaning that the short term average started to fall under the long term average.

Given that this was also the period that Bitcoin started trading above the $20k level, a simple transfer of investment from Link into Bitcoin could be the explanation of course. It remains to be seen whether this is a long term trend.

SEC rumors

Eternal nemesis Zeus Capital, the company that is willing to pay money to anyone having dirt on Chainlink and its founders, launched a rumor that the SEC will investigate Chainlink next. In their statement, they said:

LINK’s characteristics, such as lack of a decentralized ecosystem, combined with recent decisions by the SEC, leave no doubt that $LINK will be classified as security putting the whole enterprise and the investors at risk.

Commenters don’t really seem convinced and replied:

This is published by your company Claim #6. Highlighted area specifically says Chainlink is declared NOT a security by the SEC. Take your FUD and your fraudulent company somewhere else.

Spreading FUD (or Fear, uncertainty and doubt) about Chainlink is of course quite easy now that XRP is being targeted.

Unsure whether any of this is true, it is of course no wonder that Zeus Capital claims this as truth. They are thus far the only one that pinpoint Chainlink as the SEC’s next target though.

To us it seems more likely that Jed McCaleb, the founder of Stellar Lumens who holds billions in XRP still (due to his agreement with the XRP board when he left), could be on the SEC’s watchlist in the next few months as the aftermath of the Ripple Labs case.

Then again, with a new SEC head incoming soon, who knows what the US justice department will pursue in 2021.