Investors are once again flocking to the meme-focused cryptocurrency Shiba Inu (SHIB), raising concerns among bitcoin traders. Open interest in Binance’s SHIB futures has more than doubled to $101.65 million this month, reaching its highest level since February 5, according to data from Coinglass. SHIB futures are traded in contracts of 1,000 SHIB with leverage of up to 25 times.
The market value of SHIB has surged by nearly 32% to $6.58 billion, driven by optimism surrounding an upcoming layer-2 launch that is expected to help the cryptocurrency shed its meme-coin reputation. The increase in open interest, coupled with the rise in market capitalization, indicates a significant influx of new money into the SHIB market. This trend has historically signaled weakness in bitcoin, the leading cryptocurrency by market value.
Inflows into SHIB futures tend to occur at interim tops in the bitcoin price, according to Coinglass. SHIB’s open interest has surpassed the $100 million mark at least seven times since its inception, with the previous six spikes coinciding with local bitcoin price tops.
This pattern aligns with traditional markets, where substantial gains in meme stocks relative to defensive plays are often seen as a contrary indicator for the broader market. CoinDesk data shows that bitcoin has been trading flat near $30,000 this month amid the SHIB rally.
However, it is important to note that past performance does not guarantee future results. Some analysts still expect bitcoin to resume its upward trend despite the current cautionary signs.
Edited by Nick Baker.
How does the increasing interest in Shiba Inu (SHIB) futures and the rise in its market capitalization potentially affect the stability of bitcoin?
Investors are once again flocking to the viral sensation of the cryptocurrency world, Shiba Inu (SHIB), and it’s got bitcoin traders concerned. The open interest in Binance’s SHIB futures has more than doubled to $101.65 million this month, reaching its highest level since February 5, according to data from Coinglass. SHIB futures are traded in contracts of 1,000 SHIB with leverage of up to 25 times.
The market value of SHIB has skyrocketed by almost 32% to $6.58 billion, driven by the growing optimism around an upcoming layer-2 launch that is expected to help the cryptocurrency shake off its meme-coin reputation. The surge in open interest, coupled with the rise in market capitalization, indicates a significant influx of new money into the SHIB market. This trend has historically been correlated with weakness in bitcoin, the leading cryptocurrency by market value.
Coinglass reveals that inflows into SHIB futures tend to happen at interim highs in the bitcoin price. SHIB’s open interest has surpassed the $100 million mark at least seven times since its inception, with each of the previous six spikes coinciding with local bitcoin price tops.
This pattern echoes what we see in traditional markets, where substantial gains in meme stocks, compared to defensive plays, are often considered a contrary indicator for the broader market. Interestingly, as the SHIB rally continues, bitcoin has been trading flat near $30,000 this month, according to CoinDesk data.
However, it’s important to remember that past performance doesn’t guarantee future results. Some analysts still anticipate that bitcoin will resume its upward trend despite the current cautionary signs.
Article edited by Nick Baker.
