The price of Chainlink (LINK) continues to set new records as the DeFi-related token increased 52% to reach a new high today at $ 13,8799.
In the last 24 hours, LINK has increased by 52%, rallying from $ 9.05 to as high as $ 13.8799 on Binance exchange.
LINK-USDT daily chart. Source: TradingView.com
When Chainlink demonstrated an amplifying uptrend, its competitor Band Protocol (BAND), which also operates as an oracle network, nailed 50% to reach a new high of $ 12.44.
What’s behind the Chainlink rally?
The sudden rise of LINK was probably primarily caused by the squeezing of short contracts in the futures market. When LINK was continuous, the funding percentage remained below 0%, hovering at -0.02%.
The cryptocurrency futures market uses a mechanism called “financing” to ensure that the market is balanced. If the market focuses heavily on buyers, then buyers need to encourage sellers and vice versa.
For example, if there is an overwhelming number of traders who are shorting Chainlink on Binance Futures, then the financing rate would be negative. In this situation, short-term contractors or salespeople have to pay long-term contractors to maintain their positions.
Over the past several hours, when LINK price went up, the financing percentage of Binance Futures remained negative. This is indicating that, as their price increased, many traders sought to shorten the stock.
A continuous run of short contracts caused a short squeeze, which, in turn, boosted the demand for purchase and the momentum of Chainlink.
A pseudonymous trader, known as Benjamin Blunts, claims that although LINK theoretically appeals to short, market sentiment is bearish. If the market by one side is too much, which in the case of LINK bears was looking to reconcile the assets, it tends to move in the opposite way.
The trader sei:
“I would actually tend to look for shorts soon, but it seems like my whole feed is doing the same. So I think of another pressure higher, not interested in standing for the strongest, fastest horse at the moment. ”
Zeus Capital and its infamous LINK short
The biggest narrative ran LINK during the entire rally revolved around Zeus Capital. The investment firm has taken a skeptical stance against Chainlink, and expects LINK price to decline sharply. On August 9 the company sei:
“The ‘rap empire’ story is a real indicator of manipulation. You can only win if you sell your $ LINK before it goes to $ 0. ”
A cryptocurrency investor called “Light” suggested that Zeus Capital has a large short position over LINK, which was apparently a risk for liquidation. Hy sei:
“And in one more poetic twist to the story of Zeus Capital, primarily, due to price oracle delays for its Aave loan, even though LINK broke its liquidation price, its remaining DeFi card has not (yet) been liquidated.”
It remains unclear whether a single short seller could have an immense impact on a cryptocurrency with a daily volume of $ 2 billion on paper.
