Exchange reserves for LINK are steadily declining, mirroring a trend that began several years ago around the $6-$7 price range. This decline coincides with rising profits and high open interest levels in derivatives markets. Is this bullish signal a harbinger of higher prices or a precursor to market instability? 🤔 📈 💰
**Exchange Supply Down**
Data from CryptoQuant shows that LINK’s supply on exchanges is down to 161.8 million, marking a multi-year trend that began in mid-2023. The price of LINK has surged over 230% since then.
**The Lower Supply Advantage**
This shrinking supply offers less pressure on the market, which could fuel further growth. Additionally, historically, decreasing exchange reserves signal the start of bull markets. A limited supply can create a perfect storm for price spikes.
**Profits Near Peak Levels**
Glassnode’s Percent Supply in Profit chart reveals that nearly 90% of LINK holders are currently profiting, aligning with previous rallies back in July.
**The Double-Edged Sword of Profits**
This high percentage of profit-seeking investors could create a risk. If these traders decide to take profits, it might lead to price drops.
**Booming Open Interest**
Owing to the rising demand for Chainlink’s services in both Web3 and Web2 sectors, open interest has skyrocketed in recent years, with more than $1.2 billion now active on the derivatives markets.
**Chainlink’s Continued Rise**
The LINK price is currently hovering around $23, showing a slight dip, but still recording a significant increase of 48% over the last month and 118% this year. This surge is a testament to Chainlink’s growing influence in DeFi.
Source: CryptoPotato, CoinMarketCap**