Cryptocurrency investors witnessed a 52% surge in the price of Chainlink (LINK) on Saturday. A massive short is likely to be behind the squeeze in the futures market.
Decentralized oracle network Chainlink provides real-world data to smart contracts on the blockchain. The token continues to set new records as the decentralized finance market plunge with investors leading the network rise in market capitalization. Chainlink to set a new record today as it reached ATH price of $13.8799.
The 24-hour chart shows that Chainlink (LINK) surged in price by 52%, rallying from $9.05 to a high of $13.8799 on the Binance exchange. With the uprising of the price of the token its competitor Band protocol (BAND) also based on the oracle, network reached an ATH of $ 12.44. This spike accounts for a hike of 50%.
A Sudden Rally of Chainlink Price but Why?
The reason behind the Chainlink rally likely to be triggered by the squeeze of the short contracts in the futures market. The funding rate stayed below 0% while the price of the token kept rising in price. The cryptocurrency futures market balance accomplished through a mechanism called “funding.” Buyers have to incentivize sellers when the market is overcrowded by buyers.
For instance, if the market is full of traders shorting tokens on Binance Futures, the funding rate would turn negative. Hence short contract holders or sellers have to pay long contract holders to sustain their positions.
During the past few hours, the price of Chainlink kept rising. However, the funding rate on the Binance Futures market sustained as negative. This is due to many traders attempt to short the asset. Many instances like this shorting of contracts caused a short squeeze. This lead to an increase in buying demand which fueled Chainlink’s impulse.
Benjamin Blunts – pseudonymous trader elaborates that Chainlinks drive towards a short, the market viewpoint is bearish.
“I actually would be inclined to start looking for shorts soon, however, it seems my entire feed is doing the same. So I will wait for another push higher I think, not really interested in standing in front of the strongest, fastest horse right now,” says Blunts.
The Shocking LINK Short – Zeus Capital
Zeus Capital maintained a skeptical stance towards Chainlink. The LINK’s entire rally revolved around the investing firm expecting the price of the token to decline drastically.
“The ‘get rich fast’ narrative is a true indicator for manipulation. You can only win if you sell your $LINK before it goes to $0,” said the firm on 9th August.
However, it remains a mystery whether a single short seller can drastically drive the market price on a cryptocurrency with a $2 Billion daily volume.
