Quote from Heatman on October 29, 2023, 1:54 pm

LINK price pulled off a shocking double-digit rally over the past week, but exactly what is behind the move?

Chainlink’s LINK token surged by a substantial 61.3% from Oct. 20 to Oct. 25, reaching a peak of $11.78 and marking its highest point since May 2022. LINK’s price then stabilized around $10.50, prompting investors to question the sustainability of this new level.

It’s worth noting that this surge coincided with Bitcoin’s 23% gain during the same period. However, LINK’s performance stands out compared with Ether’s 14% increase and SOL’s 28% rally, suggesting increased bullish sentiment toward Chainlink’s leading oracle and decentralized computing solutions.

Chainlink partnerships and integrations back the rally

Several recent developments have contributed to LINK’s outperformance of its peers. Notably, the announcement of Chainlink’s upcoming native staking upgrade set for release in the next couple of months garnered significant attention. The initial staking pool was a resounding success, filling up in less than three hours, and the planned expansion promises greater flexibility through staking withdrawals, improved security guarantees and dynamic rewards.

 

Additionally, Chainlink’s integration into various blockchain networks has fueled optimism among LINK investors. For instance, on Oct. 15, Chainlink revealed its provision of services to Advanced Crypto Strategies DAO, a multichain yield optimizer and automated liquidity manager, and Equilibria, a yield booster for Pendle Finance.

By Oct. 22, Chainlink services had been integrated into Cobo Global, an institutional-grade digital custody solution, StaFi Protocol’s liquid staking solution for proof-of-stake chains, Ethereum’s on-chain derivatives platform Thales Market, and Xena Finance, which offers 50x perpetual futures on Coinbase’s Base chain.

 

On Oct. 24, telecom giant Vodafone made a significant announcement, revealing its digital asset arm’s involvement in the Chainlink network as a node operator. This came after completing a proof-of-concept with the Japanese trading and investment company Sumitomo for the exchange of trade documents across platforms. 

 

FTX and Alameda Research bankruptcy liquidation fear dissipates

The price of LINK came under pressure following the Delaware Bankruptcy Court’s approval of the sale of FTX and Alameda Research cryptocurrencies on Sept. 13. Initially, there were concerns about the potential liquidation of $3.4 billion worth of digital assets, including LINK, which raised fears of a market crash. However, recent transfers from wallets associated with the bankruptcy estate have been gradual and had little impact on prices.

 

As the concerns related to the FTX and Alameda Research bankruptcy subsided and renewed interest in mid-capitalization altcoins emerged with Bitcoin’s rise above $32,000 on Oct. 23, investor interest in LINK grew. Consequently, the demand for leveraged long positions in LINK reached a three-month high, as indicated by the funding rate.

 

A positive funding rate indicates that longs (buyers) are seeking increased leverage, while the opposite scenario arises when shorts (sellers) require additional leverage, leading to a negative funding rate.

It's worth noting that the current 0.014% eight-hour rate translates to a 0.3% cost over a seven-day period, which is not significant for traders building futures positions. Typically, when there is an imbalance driven by excessive optimism, the rate can easily exceed 1.0% per week.

In addition, the number of active addresses in the Chainlink network has reached an 11-month high, as reported by Messari and Coin Metrics data.

Interestingly, the previous peak occurred on Nov. 7, 2022, when the issues with FTX led to a six-month high in LINK’s price at $38.32. This coincides with concerns surrounding FTX’s withdrawals and apprehensions about the impact of its native FTX Token (FTT) following Changpeng “CZ” Zhao’s decision to liquidate Binance’s FTT holdings the previous day.

 

The subsequent 30 days proved extremely negative for LINK’s price, with the token plummeting by 51.7% to $18.50. Nevertheless, LINK enthusiasts need not be concerned this time, given the substantial developments in its ecosystem and the promising advancements in Chainlink’s native staking solution.

Chainlink (LINK) token price, 12-hour, USD. Source: TradingView