As Bitcoin reaches record highs, an increase in speculative trading surrounding cryptocurrency Shiba Inu (SHIB) is raising concerns about potential market froth.
Shiba Inu Sounds the Greed Alarm as Bitcoin Soars to Record Highs
Interest in SHIB futures has surpassed $100 million, historically indicating an increase in speculative activity for the broader cryptocurrency market.
Nominal open interest on SHIB perpetual futures contracts exceeded $100 million for the first time since August 2023, according to data from CoinGlass.
These futures contracts, sized at 1,000 SHIB per contract and leveraged up to 25 times, represent a significant inflow of speculative capital into SHIB trading.
Last week, SHIB's market cap increased by over 130% to $13.44 million.
While the increase in both market capitalization and open interest indicates increased interest in SHIB, it also serves as a warning sign of speculative excess and a potential correction in the broader cryptocurrency market.
Notably, previous instances where open interest in SHIB futures exceeded $100 million coincided with intermediate or local peaks in Bitcoin prices, raising concerns about market overheating.
Markus Thielen, founder of 10X Research, highlighted the wave of individual activity spreading through altcoins and memecoins that contributed to the increased trading volumes on Korean exchanges.
Despite these warning signs, Thielen predicts that Bitcoin could rise above its all-time high of $69,000 this week, driven by inflows into US-based spot ETFs that continue to outpace daily new BTC creation.
*This is not investment advice.