Chainlink (LINK) Surges 52%, Records New Historical High in Binance Futures

The price of Chainlink (LINK) token hit a new historical high of $13.88 on Binance exchange earlier today, reflecting a gain of 52% or $9.05 in the past 24 hours. As the decentralized finance (DeFi) linked token continues to surge, its contender Band Protocol (BAND), which also runs a mesh of oracles, appreciated sharply by 50% to set a new record high of $12.44.

The surge of LINK token was probably triggered by squeeze of short positions in the futures trading platform. As LINK had been rising for a while, its funding rate stood below 0%, fluctuating around-0.02%.

The crypto futures market deploys a system called “funding” to make sure that the market remains balanced. When the market is heavily tilted towards a single direction, for example on buyer side, the buyers have to compensate sellers and vice versa.

If there is a huge chunk of active short sellers in Chainlink counter on Binance Futures platform, then the funding rate would become negative. In such a scenario, short sellers have to compulsorily pay long contract holders to hold on to their positions.

For several hours, the funding rate for LINK has been negative on Binance Futures trading platform. This implies that many sellers have been opening short positions when the token price was soaring. Such a series of short positions usually results in a short squeeze, sparking a sharp rise in price.

An trader going by pseudonymous name Benjamin Blunts stressed that while LINK on paper seems to be an attractive asset for opening short position, the reality is the exact opposite as majority of speculators are on selling side, giving opportunity for large players to push it further upwards.

The trader said:

“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.”

The story underpinning LINK’s rally whirls around Zeus Capital. The investment company has openly held a cynical position towards Chainlink, anticipating LINK token’s price to drop sharply.
“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.”

A crypto investor, referred by the name ‘Light,’ stated that Zeus Capital suspects that Zeus Capital holds a huge short position in the counter and is facing the likelihood of liquidation. He stated:

“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).”

There is no clarity as to whether an individual seller could have a huge impact on a crypto which commands a daily trading volume of $2 billion.