Chainlink Price Rally Faces Key Test at $10 Despite Bullish Derivatives Surge 

Chainlink Price Analysis
  • An inverted flag pattern drives the short-term relief rally in Chainlink price.
  • The SEC and CFTC jointly issued long-awaited regulatory guidance on crypto assets.
  • The open interest tied to LINK’s futures contracts recorded to from $362 million to $462, suggestive a return of speculative force in price.

LINK, the native cryptocurrency of decentralized oracle network, is down 1.31% to Tuesday trade at $9.8. The selling pressure was a temporary pullback after a broader market recovery since last week. However, the digital assets prevented a drawdown as the Security and Commission issued an interpretation that clarifies the application of federal securities laws to crypto assets. In addition, the derivative trading linked to LINK’s futures contracts recorded a renewed uptick this week, signalling an opportunity for Chainlink price breakout.

New SEC–CFTC Framework Classifies LINK as Digital Commodities

The past week, the Chainlink price rebounded from $8.4 to $9.83, registering a gain of 17%. Consequently, the asset’s market cap also rose to $6.9 billion.

The buying pressure follows the footsteps of Bitcoin amid the easing geopolitical tension in the middle east including the strait of Hormuz. While the price recovery slowed down today, U.S. regulators finally offered long-awaited clarity on the status of many cryptocurrencies when the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) released a joint interpretive guidance document. The release specifically classifies the several major cryptocurrency under digital commodity including, Chainlink (LINK).

The document creates five different categories of crypto assets: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. 

The guidance stresses that most crypto assets are not securities, settling previous uncertainties. SEC Chairman Paul Atkins said the move represented “recognition of realities that were overlooked in previous administrations, combined with recognition that an asset that is considered a security under investment contract analysis may move out of that status once such investment contracts are completed.”

This classification helps explain jurisdictional lines between the SEC, which is in charge of securities, and the CFTC, which is responsible for commodities and related derivatives. Market participants have a better understanding of what oversight applies, which may help minimize compliance costs and enforcement disputes that characterized earlier times.

In parallel developments, there was increased trading for Chainlink-linked futures contracts. Coinglass metrics witnessed an increase in open interest in these contracts from $362 million to $460 million – a rise of about 27%. 

Chainlink Open Interest

Open interest indicates the overall notional value of open positions and such a spike is often an indication of new capital into the market or existing positions being extended, often in response to positive sentiment or better regulatory positioning.

Chainlink Price Face Bearish Reversal With Flag Pattern

Earlier today, the Chainlink price attempted another breakout from $10 resistance but failed with a long-wick rejection. Interestingly, the price pullback is positioned at the resistance trendline of an inverted flag pattern.

The chart setup is characterized by a long downsloping trendline followed by a temporary relief rally to recoup its prevailing bearish momentum. If the supply pressure at overhead trendline persits, the LINK price could plunge 7% and challenge the bottom support at $9.14.

A bearish breakdown from this floor would further intensify the selling pressure and drive prolonged downtrend to $9.86.

Chainlink Price
LINK/USDT -1d Chart

On the contrary, the Chainlink price must breach the overhead trendline to regain bullish momentum.

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Sahil Mahadik
Written by Sahil Mahadik
With over three years of hands-on experience in the financial markets, Sahil has honed an exceptional proficiency in technical analysis, which is the cornerstone of his daily monitoring of price fluctuations in leading assets and indices. His foray into the ever-evolving world of cryptocurrency began with a deep fascination for financial instruments. Sahil currently contributes to CryptoNewsZ but has also been featured in prominent publications like Coingape.