Chainlink's LINK token surged 7.48% to $13.13 on Tuesday, but the move looks more like a short squeeze than a wave of fresh buying. Open interest collapsed during the spike, a classic sign that traders who had bet against the token were forced to cover their positions.
Why the rally looks like a squeeze
The price jump came with a sharp drop in open interest, meaning contracts were closed rather than opened. That's the fingerprint of a short squeeze: sellers scrambling to buy back, not new money piling in. The relative strength index sits at 73.72, deep in overbought territory, which usually signals the move is stretched.
Momentum isn't backing the rally either. The MACD histogram is flat, showing weak underlying momentum despite the price spike. In other words, the technicals are screaming that this surge may not have legs.
What traders are watching next
Before bulls can dream about $14.58, LINK likely needs to retest the $12.96 pivot level. That's the price zone where the squeeze started, and a retest would either confirm support or expose the move as a flash in the pan. If the pivot holds, the path to $14.58 opens up. If it doesn't, the overbought RSI suggests a pullback could be sharp.
The big question is whether the squeeze has fully played out. With open interest already collapsed, there may be little fuel left for another leg up. Traders will be watching the next few sessions to see if volume returns on the upside or if the token drifts back toward the pivot.
