In the volatile world of cryptocurrencies, caution flags are being raised as Bitcoin prepares to challenge its all-time high, with a special spotlight on meme cryptocurrency Shiba Inu (SHIB). Recent data from CoinGlass shows that speculative excess is on the rise, urging Bitcoin enthusiasts to exercise discretion.
Notional open interest, representing the dollar value locked in active perpetual futures contracts linked to SHIB, has exceeded $100 million for the first time since August 2023. These SHIB futures are sized at 1,000 SHIB per contract with leverage up to 25x. Raised concerns about potential risks in the crypto market.
Over the past seven days, SHIB has seen its market capitalization surge by a staggering 130%, reaching $13.44 million and outpacing the 22% rise in the CoinDesk 20 index. This increase in open interest, coupled with the significant increase in market value, indicates an inflow of new money into SHIB. Historically, open interest of more than $100 million in SHIB futures often signals an interim or local Bitcoin price top.
Shiba Inu is not the only cryptocurrency to sound the alarm of speculative froth. Recent data from 10X Research shows that trading volumes in South Korea have increased significantly, averaging almost $8 billion, which is a significant jump from the $1 billion per day seen before the recent Bitcoin bull run.
Marcus Thielen, founder of 10X Research, suggests that there is a wave of retail activity in various altcoins and meme-coins, which is contributing to the increase in trading volumes on Korean exchanges. He said Bitcoin could potentially reach a new all-time high of more than $69,000 this week, citing continued inflows into U.S.-based spot ETFs, which exceeds the daily creation of new BTC.
Thelen also highlighted the supply-demand imbalance, emphasizing that OTC trading desks working with large institutional clients are seeing a decrease in balance, indicating a significant shift in market dynamics. As institutions, including Bitcoin ETF issuers, face a supply-demand imbalance of 1:10 (daily mining vs. daily ETF demand), concerns about the growing influence of greed in the crypto market intensify.
Is the Shiba Inu surge a harbinger of a broader market trend, or is it an isolated phenomenon? Bitcoin bulls are urged to tread carefully as the crypto landscape navigates uncharted waters.