Chainlink (LINK) Derivatives Demand Surges As Open Interest Soars To New Highs

Chainlink (LINK) price just concluded the week in the red despite previously extending its bullish momentum into the first half of the week.

But a closer look at its demand and supply characteristics revealed that its price action was mostly influenced by the derivatives market.

According to Coinglass, LINK experienced its most intense demand wave in the derivatives segment this past week.

It was characterized by $1.48 billion in open interest, which marked its highest ever recorded.

Meanwhile, spot demand was almost nonexistence during the last 7 days. Spot data revealed that LINK had about $109 million worth of spot outflows in during the week.

This meant there was no spot demand to support further upside. Spot sell pressure on Thursday alone soared to levels last seen in December.

Chainlink (LINK) Price Faces a Liquidation Event

The presence of sell pressure at a time when market excitement was mostly in the derivatives segment created a short opportunity.

Unsurprisingly, LINK long liquidations surged to a multi-month high on Thursday.

LINK derivatives activity revealed important clues regarding the nature of its weekly price action. The situation may have set the stage for a long squeeze, thus the substantial pullback.

LINK retreated by about 12% in the second half of the week. It exchanged hands at $21.5 at the time of observation.

The next move could heavily rely on whether spot demand will make a comeback in the next few days.

Were LINK Whales the Architects of the Recent Market Volatility?

Whale activity has been contributing significantly to LINK’s recent price action. For example, whales on Binance and OKX collectively sold about $3.5 million worth of LINK in the spot market over the last 2 days

Whales also executed about $56.9 million worth of short positions during the same 2-day period. It was worth noting that this wave of sell pressure was not synonymous with a major selloff. However, it did result in a significant pullback.

Data also revealed that some whales were taking advantage of the recent pullback. For instance, Lookonchain observed large buys by two long-term holder addresses.

The two addresses reportedly transferred 327,465 LINK worth over $7 million from Binance.

The report revealed that the two addresses have been accumulating LINK and the last time they showed activity was about 4 weeks ago.

The acquisition by long-term whales suggests that the cryptocurrency’s long term outlook remained bullish.

In other words, they have also been treating this latest pullback as a chance to buy while prices were still lower.

Chainlink Adoption Underpins LINK’s Long Term Bullish Outlook

Organic demand for LINK is a major factor contributing to its market pricing. This means the cryptocurrency’s outlook may be heavily influenced by the native network’s performance.

Chainlink has been securing its position as the world experiences a financial revolution driven by blockchain.

It recently achieved a major adoption milestone with its latest integration into the banking sector.

Chainlink was a part of the retest trial run of JPMorgan’s first public blockchain-based transaction in collaboration with Ondo.

The trial run focused on the transfer of tokenized treasuries. This development underscored Chainlink’s possible future in the tokenized real-world assets (RWAs).

It may put the network on track to become a large-scale financial infrastructure. In other words, Chainlink could be on the cusp of a heavy utility adoption.

That may bode well for LINK in terms of organic demand. This may also be one of the reasons for the healthy long-term outlook.