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Massive Short Squeeze Prompts Chainlink (LINK) Price to Rally 52%

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Chainlink (LINK) price continues to set new records as the DeFi-related token surged 52% to reach a new all-time high at $13.8799 today. 

Over the last 24-hours, LINK has surged by 52%, rallying from $9.05 to as high as $13.8799 on Binance exchange. 

LINK-USDT daily chart. Source: TradingView.com

As Chainlink demonstrated a strengthening uptrend, its competitor Band Protocol (BAND), which also operates as a network for oracles, spiked 50% to reach a new all-time high at $12.44.

What’s behind the Chainlink rally?

The sudden uptrend of LINK was likely caused primarily by the squeeze of short contracts in the futures market. As LINK was continuously rising, its funding rate stayed below 0%, hovering at -0.02%.

The cryptocurrency futures market employs a mechanism called “funding” to ensure the market is balanced. When the market is heavily swayed toward buyers, then buyers have to incentivize sellers and vice versa.

As an example, if there is an overwhelming number of traders shorting Chainlink on Binance Futures, then the funding rate would turn negative. In this situation, short contract holders or sellers need to pay long contract holders to maintain their positions.

Throughout the past several hours, as LINK price soared, its funding rate on Binance Futures remained negative. This is indication that as its price was soaring many traders were attempting to short the asset.

A continuous loop of short contracts caused a short squeeze, which, in turn spurred buying demand and fueled Chainlink’s momentum.

A pseudonymous trader known as Benjamin Blunts emphasized that while LINK is theoretically appealing to short, the market sentiment is bearish. When the market is overcrowded by one side, which in the case of LINK was bears looking to short the asset, it tends to move in the opposite way. 

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.”

Zeus Capital and their infamous LINK short

The biggest narrative around LINK during the entirety of its rally revolved around Zeus Capital. The investment firm has publicly maintained a skeptical stance toward Chainlink, expecting LINK price to decline sharply. On August 9 the firm said:

“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 cryptocurrency investor called “Light” suggested that Zeus Capital holds a big short position on LINK, which was apparently at risk of liquidation. He said:

“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 remains unclear whether a single short seller could have an immense impact on a cryptocurrency with a $2 billion daily volume on paper.





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SEC Investigates Tesla’s CEO Elon Musk over Tweets Promoting DOGE

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Shortly after Klarna CEO Sebastian Siemiatkowski expressed his concern over tweets promoting Bitcoin, reports revealed that the SEC is investigating Musk over DOGE tweets.

The price of DOGE has declined in reaction to the news that the US Securities and Exchange Commission (SEC) is currently investigating Tesla’s (NASDAQ: TSLA) CEO Elon Musk over Dogecoin tweets.

Recently, Elon Musk has been advocating for cryptocurrencies through his Twitter Inc (NYSE: TWTR) posts. Last month, the CEO of the electric vehicle company revealed his interest in the leading crypto asset, adding the Bitcoin hashtag to his Twitter bio. Musk’s action sparked several comments in the crypto community, fueling an increase in the price of BTC.

SEC vs Musk Promoting DOGE

Shortly after including the Bitcoin hashtag on his Twitter bio, Musk posted several tweets, along with images, promoting DOGE. While the CEO’s continuous tweets on DOGE appear as jokes, the posts have been influencing the price of the digital asset. The price of Dogecoin has continually increased in reaction to Musk’s several posts. Over the past month, DOGE has surged more than 500%.

The cryptocurrency, which started as a meme, now has a more than $6.6 billion market value. At the time of writing, DOGE is down 8.55% to $0.05113.

Following a series of tweets that fueled the price of DOGE, the SEC is now investigating Musk over potential security violations regarding the cryptocurrency. On the 25th of February, financial newswire First Squawk announced in a tweet.

Back in 2018, the SEC filed a lawsuit against Musk regarding a comment he made on Twitter, saying that he was considering a decision to take Tesla private. In the tweet, the CEO said:

“Am considering taking Tesla private at $420. Funding secured.”

The SEC reacted to Musk’s claim that the funding was secured. Eventually, the case was settled, with Tesla and Musk paying $20 million fines each.

Klarna CEO Calls For Regulations On Tweets Promoting Bitcoin

Recently, the CEO of European fintech giant Klarna, Sebastian Siemiatkowski, expressed his worry over tweets promoting Bitcoin. The CEO’s comment came about 24 hours before news on Musk’s investigation with the SEC.

In an interview with CNBC on the 24th of February, Siemiatkowski said he is “deeply worried” that such tweets could mislead retail traders. Speaking further in an interview with CNBC on the 24th of February, Klarna CEO called on regulators to caution such tweets to prevent people from potential losses.

As stated in a CNBC report, Siemiatkowski explained:

“It’s great that we can introduce new financial products and so forth. But they need to follow the standard regulations that we put in place and somebody needs to police that to make sure those are being met because otherwise what we will have is a lot of consumers losing a lot of money. And that’s just unfortunately what’s happening.”

Other news about cryptocurrencies can be found here.

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Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.





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Focus on DeFi ‘fairness’ benefits Holochain, Orion Protocol and Dodo

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Bitcoin’s (BTC) strong bull run and the immense popularity of the decentralized finance space have attracted several new investors to cryptocurrencies. A report from Crypto.com shows a massive increase in crypto users as the figure rose from 66 million in May 2020 to 106 million by January this year. 

Crypto market data daily view. Source: Coin360

Contrary to the popular notion that new crypto users are mostly speculating on the price, data from Unchained Capital shows that investors who bought in the past three to five years are still holding and are not yet tempted to book profits.

Unlike the 2017 bull market where many low-cap altcoins rallied, the current bull trend has rewarded projects with strong fundamentals. Let’s have a look at three such tokens and also analyze their charts.