Exchange supply levels for LINK continue to decline, following a movement that began a few years ago. With profits and open interest at sky-high levels, one might wonder: will this trend ignite the next market upswing, or is there more to the story?
Exchange Reserves Drying Up
According to data from CryptoQuant, as of the time of writing, the token’s supply levels on exchanges have plummeted to 161.8 million. This marks a multi-year trend that started in mid-2023 when LINK’s price hovered around $6 to $7.
Despite the dwindling supply levels, the asset has been steadily increasing, now up over 230% since its previous range more than two years ago. The lower the availability for sale, the less market pressure is exerted. A decrease in reserve levels on exchanges typically coincides with bull runs, as the limited supply can catalyze significant price increases.
If LINK experiences a surge in buying momentum, the reduced liquidity could pave the way for higher prices.
Profits Near Apex Levels
Moreover, Glassnode’s Percent Supply in Profit chart supports the bullish momentum. Current data shows a striking 90% of LINK holders are in profit, coinciding with the last rally in July.
This high percentage of holders sitting on unrealized profits could signal potential price declines if some traders choose to cash in. Nevertheless, LINK has maintained a relatively healthy profit-taking margin thus far.
Booming Interest
In addition to the favorable supply dynamics, open interest (OI) in derivatives markets has skyrocketed over the past year. As of September 1, 2024, OI was approximately $115 million, an explosive growth to over $1.2 billion according to Messari.
This surge in interest aligns with the broader acceptance of Chainlink and its native token among institutional and retail investors. The project has established several key partnerships between Web3 and Web2, consolidating its position as a significant player in DeFi, thus capturing considerable investor attention.
Currently, the oracle service’s token trades around $23, reflecting negligible daily fluctuations compared to a remarkable 48% increase over the past month and an impressive 118% rise year-over-year.
As these dynamics evolve in the coming months, investors will be keenly observing whether LINK can maintain its upward trajectory amid the burgeoning interest and shifting supply landscape.
