Bitcoin hits all-time high, Shiba Inu sounds greed alarm

Open interest in SHIB futures has topped $100 million, suggesting a speculative bubble.

Open interest in SHIB futures has topped $100 million, suggesting a speculative bubble. One analyst said that Bitcoin’s supply-demand imbalance has widened to 1:10, indicating a rise to new all-time highs this week.

Speculative excess is growing in the cryptocurrency market, suggesting that Bitcoin (BTC) bulls remain cautious as the leading cryptocurrency by market capitalization appears to be challenging all-time highs.

The notional open interest, or dollar value, locked in active perpetual futures contracts tied to the meme cryptocurrency shiba inu (SHIB) topped $100 million for the first time since August 2023, according to data from CoinGlass. SHIB futures are available in sizes of 1,000 SHIB per contract with up to 25x leverage.

SHIB’s market capitalization has surged more than 130% to $13.44 million in the past seven days, outpacing the CoinDesk 20 Index’s 22% gain. An increase in open interest coupled with a rise in market value represents an influx of new money into SHIB.

However, this is a sign of excessive speculation and a sign that the broader market is about to correct.

A previous SHIB futures open interest of over $100 million has marked a mid-term/local high for Bitcoin prices.

SHIB isn't the only one signaling a speculative bubble. Data tracked by 10X Research shows that average trading volume in South Korea has recently been at or near $8 billion, a significant increase from the $1 billion observed per day before Bitcoin’s bull run built up.

“There’s been a wave of retail activity from altcoins to meme coins,” said Markus Thielen, founder of 10X Research, referring to rising trading volumes on South Korean exchanges.

Thielen added that Bitcoin could hit a new all-time high above $69,000 this week as inflows into U.S. spot ETFs continue to significantly exceed the amount of BTC created every day. This caused the supply-demand imbalance to widen to 1:10.

“Over-the-counter (OTC) trading desks are dealing with large institutional clients and Bitcoin balances have declined from nearly 10,000 Bitcoins in Q2 2023 to less than 2,000 Bitcoins, according to its aggregated inventory data.This suggests that institutions such as Bitcoin ETF issuers will have to purchase Bitcoin directly from exchanges through their market makers. The supply-demand imbalance is 1:10 (daily mining volume vs. daily ETF demand),” Thielen noted.

Outflows from the Grayscale Spot ETF (GBTC) accelerated late last week, with the fund losing $600 million on Thursday in its largest single-day redemption in more than a month.

Meanwhile, flows into BlackRock IBIT fell to $202 million on Friday after hitting $500-600 million for three consecutive days, according to 10X Research.