It is likely that the massive short squeeze in the futures market is the reason why Chainlink price rallies into 52 percent on Saturday.
DeFi-related token went 52 percent and it achieved a fresh all-time high at $13.8799 today. Thus, Chainlink (LINK) price persists on setting new records.
LINK soared by 52 percent over the last 24 hours. It rallied from $9.05 to as high as $13.8799 on Binance exchange.
On the other hand, Chainlink’s competitor, Band Protocol (BAND), which also functions as a network for oracles, went 50% achieved a fresh all-time high at $12.44.
The Reason Behind the Chainlink Rally; Price Rallies into 52 Percent
The unexpected uptrend of LINK was probably because of the squeeze of short contracts in the futures market. LINK continued on rising, however, its funding rate remained below 0% and lingered at -0.02%.
The cryptocurrency futures market has a feature called “funding” to make sure that the market is balanced. In the case that the market is swayed toward buyers to a great extent, the buyers need to motivate sellers and vice versa.
For instance, the funding rate would be negative if there is a large number of traders shorting Chainlink on Binance Futures.
LINK price surged throughout the past several hours. However, its funding rate on Binance Futures remained negative. This indicates that the traders were trying to short the asset as the price soar high.
A short squeeze was brought upon by a continuous loop of short contracts. As a result, it incites a buying demand. Moreover, it was a reason for the Chainlink’s momentum.
A pseudonymous trader who was also known as Benjamin Blunts talked about this in a tweet. He pointed out that even though LINK is theoretically appealing to short, the sentiment of the market is still bearish. In the case of LINK, bears were looking to short the asset thus it tends to go in the opposite way. He said:
Zeus Capital and their Infamous LINK Short
Zeus Capital is where the biggest narrative of LINK revolved during the entirety of its rally. The investment firm has openly kept up a skeptical stance toward Chainlink. They are expecting a sharp LINK price decline. On August 9, the firm stated:
Furthermore, a cryptocurrency investor called “Light” said that Zeus Capital takes a big short position on LINK. He further said it was apparently at risk of liquidation. The investor stated:
It is still not clear whether a single short seller could cause a big impact on a cryptocurrency with a $2 billion daily volume on paper.