Massive Short Squeeze Prompts Chainlink Price to Rally 52%

The sudden uptrend of LINK was likely caused primarily by the squeeze of short contracts in the futures market.

If there is an overwhelming number of traders shorting Chainlink on Binance Futures, then the funding rate would turn negative.

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.

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 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.

A cryptocurrency investor called "Light" suggested that Zeus Capital holds a big short position on LINK, which was apparently at 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."