LINK is by far one of the best performing altcoins of 2020 and is up more than 470% from last year. The DeFi related token has continued to break new records and recently jumped more than 50% to set an all-time high of $13.8799 on August 9.
The massive rally over the past 48 hours saw LINK jump from $9.05 to as high as $13.8799 on Binance while also momentarily securing the spot of the third-largest cryptocurrency, surpassing Tether (USDT) and XRP.
What caused the LINK rally?
According to analysts, the move was fuelled by the squeeze of short contracts in the futures market. During the rally, the price of the altcoin’s funding rate stayed below 0%, hovering at -0.02%.
Funding is a mechanism that is used by futures markets to maintain balance in the market. A surge in the number of traders shorting LINK would turn the tokens’ funding rate to negative. In such a scenario, short contract holders or sellers need to pay long contract holders to maintain their positions.
As LINK continued to rally upward, the token’s funding rate on Binance Futures remained negative, hinting that traders were attempting to short the token.
The constant attempts at shorting LINK initiated the short squeeze that spurred buying demand and fuelled Chainlink’s rally.
The token also hit a new all-time high in terms of the number of daily active addresses, that has now surpassed 15,600 according to crypto analytics platform Santiment.
Majority of the crypto community remain bullish about LINK at the moment. Prominent crypto trader Galaxy, who had previously confirmed the breakout near the $7 region, now marks $20 as the next “logical” target for LINK.
Bearish scenario in the near future?
Despite the quick rally that turned a lot of heads, popular crypto commentator Benjamin Blunts highlighted that the overall sentiment remains bearish since the market was overcrowded with bears.
Meanwhile, all eyes were on the controversial investment firm Zues Capital, as it has been referred to as one of the biggest LINK skeptics, expecting LINK price to decline sharply. The firm recently tweeted:
“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.”
On this matter, one crypto analyst called “Light” believes that the firm holds a massive short position on Link that is at the risk of liquidation.
“And in one more poetic twist to the Zeus Capital story, for now, due to delays in the pricing oracle for their Aave borrow, even though LINK breached their liquidation price, their remaining DeFi short has not been liquidated (yet).”
It is yet to be seen whether a single short could have an impact on the altcoin with a $2 billion daily volume on paper.
At the time of writing, LINK is trading at $13.25 and is up 24.8% over 24 hours. Technical indicators are signaling that bulls are still in control with moving averages pointing at a strong buy signal over the week.
The next major resistance stands at $15, which if broken, could strengthen the rally towards $20.