SHIB futures open interest has surpassed $100 million, suggesting speculative froth.
Crypto Market Updates : The cryptocurrency market is experiencing a build-up of speculation, which cautions proponents of bitcoin (BTC) as the top coin by market value attempts to break all previous records.
For the first time since August 2023, the dollar amount locked in the active perpetual futures contracts linked to the popular cryptocurrency Shiba Inu (SHIB), or the notional open interest, has surpassed $100 million, according to CoinGlass. SHIB futures have a contract size of 1,000 SHIB and a maximum leverage of 25 times.
SHIB’s market value has increased by approximately 130% to $13.44 million during the last seven days, outpacing the CoinDesk 20 index’s 22% gain. An increase in market value accompanied by a rise in open interest indicates fresh capital entering SHIB.
Previous occurrences of a local or interim peak in bitcoin prices have been identified by an open interest in SHIB futures above $100 million.
Not just SHIB is indicating speculative froth. Volumes in South Korea have recently averaged at or above $8 billion, according to data maintained by 10X Research. This is a considerable increase from the $1 billion per day seen prior to the bitcoin bull run gaining traction.
In reference to the increase in trading volume on Korean exchanges, Markus Thielen, founder of 10X Research, stated, “There is a wave of retail activity occurring from altcoins to meme-coins.”
According to Thielen, given that money is still being poured into U.S.-based spot ETFs at a rate much higher than the amount of bitcoin that is created every day, the cryptocurrency may reach a new all-time high above $69,000 this week. The result is a growing supply-demand mismatch of 1:10.
“According to their aggregate inventory data, OTC trading desks, which serve major institutional clients, have seen a decline in Bitcoin balances from around 10,000 in Q2 2023 to fewer than 2,000. This indicates that organizations like the issuers of Bitcoin ETFs will need to buy Bitcoins straight from exchanges via their market makers. Daily mined vs. daily ETF demand indicates a 1:10 supply/demand imbalance, according to Thielen.
The spot ETF (GBTC) offered by Grayscale began to see withdrawals towards the end of last week. On Thursday, the fund experienced its worst single-day redemption in more than a month, with a $600 million loss. Meanwhile, after three days of $500–600 million in inflows, 10X Research reports that on Friday, BlackRock’s IBIT saw a decline to $202 million.
According to Thielen, the dip is merely a one-time month-end anomaly, and robust inflows may start up again this week.
“This week, we anticipate that BlackRock inflows will resume. Bitcoin will rise significantly if Grayscale’s outflows fall to less than $100 million, according to Thielen.