Chainlink ETF Filing Sparks Debate Over In-Kind Creation's Market Impact

Bitwise Asset Management has submitted an S-1 registration statement to the U.S. Securities and Exchange Commission (SEC) to launch a spot-based exchange-traded fund (ETF) focused on Chainlink (LINK), a decentralized oracle network. This initiative marks the first U.S. spot ETF targeting Chainlink’s native token, which is currently trading at $23.89. The proposed ETF is designed to provide investors with direct exposure to LINK and will be held in custody by Coinbase Custody, a trusted custodial service in the cryptocurrency sector [1].

According to the filing, the Bitwise Chainlink ETF will be structured as a Delaware statutory trust and will track the CME CF Chainlink–Dollar Reference Rate (New York Variant). The fund will offer both in-kind and cash transactions, with creation and redemption mechanisms allowing authorized participants to transact in either LINK or U.S. dollars in blocks of 10,000 shares [2]. The in-kind creation process, if approved, would represent a significant shift in the ETF landscape, as most crypto ETFs currently rely on cash-based settlements. This model could increase liquidity and reduce price discrepancies between the ETF and the underlying asset’s market price.

Following the filing, the price of LINK experienced a 5% rebound from its overnight lows, reaching $23.54. However, the token remained under bearish pressure in the broader context of a consolidating market. Over the past 24 hours, LINK’s price fluctuated within a $1.84 range, trading between $22.90 and $24.81. The increased trading volume—surpassing 6.58 million units—was notably higher than the 2.29 million 24-hour average, suggesting renewed investor interest [1].

Technical indicators suggest that the price of LINK must reclaim the $24.00 level to mitigate bearish momentum. A break below the $23.40 support level could trigger further downward movement toward $23.00. Conversely, if the price holds above the $23.00 level, it may indicate a potential stabilization phase. The surge in whale activity and increased open interest—reaching $897 million before declining to $710 million—further highlight the growing institutional interest in LINK [3].

The proposed ETF filing also aligns with a broader trend of asset managers seeking to expand the selection of altcoin-focused ETFs in the U.S., particularly as regulatory scrutiny has eased under the Trump administration. Bitwise is not the only firm pursuing this strategy; other industry players, including Wisdom Tree and Canary Capital, have also filed for similar products. These developments reflect an increasing demand for diversified exposure to digital assets beyond Bitcoin and Ethereum.

Analysts note that a potential Chainlink ETF could influence market dynamics by creating a supply squeeze. As LINK tokens continue to be locked up in oracle services, institutional investment could amplify the impact of each transaction. The token’s role in securing over $59.56 billion in value across 458 protocols further underscores its strategic importance in the decentralized finance (DeFi) ecosystem [3].

Source: [1] Chainlink Price News: 5% Bounce on Spot LINK ETF Filing ... (https://www.coindesk.com/markets/2025/08/26/bitwise-files-to-launch-a-spot-chainlink-etf-link-bounces-5) [2] Bitwise Submits S-1 Filing to US SEC for Spot Chainlink ETF (https://finance.yahoo.com/news/bitwise-submits-1-filing-us-153229829.html) [3] LINK token sees relief as Bitwise files for Chainlink ETF (https://cryptorank.io/news/feed/84c3b-bitwise-files-for-chainlink-etf)