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Despite heavy Exchange Inflows, recurring buybacks and Bitwise ETF purchases supported Chainlink’s two-day 15% rally.
The Chainlink buyback added another demand source and reduced $LINK’s available supply. The protocol purchased 103,041 $LINK for about $1.09 million during the week.
Although higher prices reduced the $LINK acquired, weekly spending remained near $1 million. Therefore, recurring purchases continued to remove available tokens as Chainlink appreciated sharply.
Institutional activity added another demand source through continued Bitwise Chainlink ETF purchases.
Bitwise purchased more than 127,000 $LINK worth approximately $1.36 million through Wintermute.
Together, protocol buybacks and Bitwise ETF purchases created two demand channels during $LINK’s 15% advance. However, these flows must offset rising Exchange Inflows, likely driven by profit-taking from short-term traders.
Can Chainlink demand offset Exchange Inflows?
Despite stronger institutional demand, $LINK’s Spot Netflow reached $4.83 million on the 21st of August.
The net inflow marked a notable reversal from the predominantly negative readings visible across previous periods.
As a result, more $LINK entered exchanges while buybacks and ETF accumulation removed supply elsewhere.
Such opposing flows provided a significant test for the rally’s durability. Demand was boosted by institutional sales, while exchange deposits added to the supply immediately available for selling.
Notably, the $4.83 million inflow exceeded Chainlink’s latest $1.09 million weekly buyback in size.
Apart from the periodic purchases by the protocol, however, ETF purchases are another source of absorption.
Continued inflows could therefore weaken supply tightening if they consistently outweighed those demand channels in the coming sessions.
Derivatives traders retreat during $LINK’s rally
While spot activity introduced supply pressure, derivatives participation cooled during $LINK’s rapid price rally.
Despite the two-day rally, traders reduced activity, with derivatives volume falling by 30.65% to $788.53 million.
Open Interest also declined 4.45% to $686.14 million rather than expanding alongside the token’s rally.
Importantly, this contraction separated the recovery from a leverage-driven expansion across derivatives markets.
Instead, $LINK advanced while outstanding leveraged positions decreased, leaving institutional and spot activity more important for continuation.
In addition, the falling Open Interest provided limited evidence of new speculative activity to aid the breakout.
The weakness may be balanced out by sustained buying of the tokens by the ETFs and buybacks.
Still, the falling derivative participation left the rally increasingly dependent on continued spot absorption and sustained buying.
Breakout reaches an overheated technical test
After clearing resistance around $9.537, $LINK broke above the $10.693 supply zone. Chainlink [$LINK] cleared resistance around $9.537 and broke above the $10.693 supply zone.
The price then reached approximately $10.91, placing the recovery above a previously contested area.
However, at press time, the RSI had surged to 82.87, pushing deeply into overbought territory following the rapid advance.
Meanwhile, MACD strengthened the bullish technical structure behind the breakout.
The MACD line at 0.576 had crossed above its signal line at 0.344.
Its histogram held positive near 0.233, supporting continued upside strength despite the overbought RSI reading.
Therefore, holding above $10.693 would keep $12.00 accessible as the next major resistance.
Alternatively, a rejection may re-direct the trend towards $9.537 while the $8.778 level provides another lower support.
Final Summary
- $LINK’s 15% rally has strengthened as ETF purchases and recurring buybacks support demand.
- Rising exchange inflows and overbought RSI could challenge $LINK’s push toward $12.