Chainlink’s Open Interest Hit Record, But What is Happening with LINK’s Price?

TL;DR

• Chainlink open interest hits record high: The total value of outstanding derivative contracts for Chainlink (LINK) reached $533 million in February 2024, the highest ever for the asset.
• LINK price could follow the open interest trend: In the past, when Chainlink’s open interest was high for a long time, the LINK price also increased by 36%. A similar rise now would push the price to $24, but still below its peak of $52.
• LINK price remains stable for now: Despite the fluctuations in open interest, the LINK price has been hovering around $20. However, a significant price movement could happen soon, depending on the open interest levels.
  

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Chainlink (LINK), a leading DeFi oracle network, has witnessed a significant surge in its open interest in February 2024. The open interest, which represents the total number of outstanding derivative contracts, such as futures and options, has reached new all-time highs.

Chainlink’s open interest concluded January on a positive note and extended this momentum into February. A significant leap was observed between January 31 and February 3, with the open interest escalating from under $250 million to over $320 million. Subsequently, the open interest kept climbing, ultimately reaching a zenith of $533 million.

This is not just the highest point for the year, but it is the highest that the open interest has ever been for the asset. Despite a retracement in the open interest, Chainlink has continued to maintain more than $450 million in open interest since February 12. As of February 23, Coinglass data shows that the Chainlink open interest is $456 million.

Chainlink Sees a Massive Increase in Open Interest in February 2024

While the Chainlink open interest is at record levels, there have been times in the past when the open interest had been elevated for some time. The last time that the open interest was this elevated for a long time was back in October-November 2023. At that time, the LINK price responded favorably, experiencing a price jump from $11 to $15, marking a 36% rise in its value.

Should the current situation mirror past events, a 36% surge would elevate the LINK price to $24. Considering that LINK reached a peak of $52 in the previous bull market, this potential increase seems plausible. However, even with this rise, it would still be 50% less than its highest recorded value.

Conversely, there’s also a possibility of a decline in open interest levels. This could result in LINK’s open interest relinquishing its grip on the $450 million mark that it sustained in February, dropping toward $400 million before bouncing back.

As of now, the LINK price is hovering around $20. Despite the fluctuations in open interest, the LINK price has remained relatively stable. However, the historical performance of the LINK price during periods of elevated open interest suggests that we might see a significant price movement in the near future.