Chainlink (LINK) is looking for momentum, while professional traders are aiming for $ 40

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Chainlink (LINK) is the leading Oracle provider, and the project took on over 281 crypto projects in 2021. Some of these are heavyweights like Huobi’s ECO Chain, the Hedera Governing Council, and Alchemix.

The Verifiable Random Function (VRF) introduced by Chainlink in October 2020 has also gained popularity in decentralized applications (dApps). VRF provides an automated source of randomness to ensure that prizes and rewards are given out in a demonstrably fair manner.

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For example, Arbitrum – a Layer Two scaling solution from Ethereum – launched a beta mainnet service on August 13th integrated with Chainlink’s Oracle data feed and intends to add a “Proof of Reserve” service, which makes it possible to check secured assets with the Oracle provider web API.

Chainlink provides a secure connection between smart contracts and off-chain data and services and serves decentralized financial applications (DeFi), social networks, NFT platforms and interoperability projects.

Big players are joining forces to support the launch of Chainlink

Key differences from Chainlink include the node operators, and Swisscom, a Switzerland-based telecommunications company, selected the project for a pilot program on August 5th. The company is 51% owned by the Swiss government and the telecommunications operator currently has more than 19,000 employees and 6 million subscribers.

On August 10, Bancor, an Ethereum-based decentralized exchange (DEX) and liquidity provider, announced that its upcoming version will integrate Chainlink Keepers to act as an external trigger for smart contracts. This tool simplifies the staking experience for liquidity providers and automates advanced trading functions.

Bancor holds over $ 1.5 billion worth of various cryptocurrencies in its smart contracts, and this shows how Chainlink’s Oracle solutions are a vital backbone of the dApps industry.

Derivative data shows a half-full glass

LINK is a crowd-pleaser, but after investors pulled back 12% from its high of $ 30.50 on August 16, investors have reason to doubt whether the uptrend has come to an end. Fortunately for bullish investors, the derivatives data signals that LINK could climb to $ 40 or higher.

Chainlink (LINK) Price in USD at Coinbase. Source: TradingView

Related: The crypto effect: trading in altcoins on the verge of addiction

Let’s take a look at LINK’s derivatives data to see how traders are handling the 14% price correction since peaking at $ 30.50 in mid-August.

LINK Futures aggregated open interest. Source: Bybt.com

At $ 260 million, the open interest of LINK futures could seem small compared to the more than $ 1 billion held by Ether (ETH), Cardano (ADA) and XRP. The number is relevant given the average daily exchange volume of $ 560 million, but it is also 65% below the larger-cap altcoins according to Nomics’ transparent volume.

Perpetual contracts, also known as inverse swaps, have an embedded interest rate that is usually calculated every eight hours. This fee ensures that there are no imbalances in exchange rate risk. A positive funding rate indicates that long positions (buyers) are the ones that require more leverage.

However, the reverse situation occurs when shorts (sellers) need additional leverage and this causes the funding rate to go negative.

LINK Perpetual Futures 8-hour financing rate. Source: Bybt.com

As shown above, the 8-hour charge averaged 0.07% between August 20 and August 24, which is 6.2% per month. This momentary surge was quickly captured when the LINK price plummeted below $ 27, signaling a balance between the leverage used by longs and shorts.

Some analysts might interpret this data as neutral to bearish, but the lack of high open interest in futures and neutral leverage is a healthy indicator. This is especially true when you consider that LINK is up 94% since its low of $ 13.40 on July 20th.

As a result, derivatives markets are signaling a healthy rebound and no obstacles to the continuation of bullish momentum above USD 40.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement carries risks. You should do your own research when making a decision.