Excessive speculation is on the rise in the cryptocurrency market, indicating caution regarding Bitcoin (btc) Bulls as the leading cryptocurrency by market cap are looking to challenge record highs.
The virtual open interest or dollar value locked in active perpetual futures contracts tied to the cryptocurrency meme shiba inu (gray) It surpassed $100 million for the first time since August 2023, according to CoinGlass. SHIB Futures has a contract size of 1,000 SHIB per contract with a leverage of up to 25 times.
In the past seven days, SHIB's market cap has risen more than 130% to $13.44 million, outpacing the 22% rise in the CoinDesk 20 Index. The increase in open interest combined with the rising market cap represents an influx of new money into SHIB.
However, it is a sign of increased speculation and an impending correction for the broader market.
Previous instances of over $100 million in open interest in SHIB futures have set temporary/local Bitcoin price highs.
SHIB isn't the only one pointing to speculative froth. Data tracked by 10X Research shows that trading volume in South Korea has averaged $8 billion or so recently, a significant rise from the $1 billion per day observed before the Bitcoin bull trend gained steam.
“There is a wave of retail activity happening from altcoins to memecoins,” said Markus Thelen, founder of 10X Research, referring to the rise in trading volume on Korean exchanges.
Bitcoin could hit a new all-time high above $69,000 this week, as inflows into US spot ETFs are still far greater than the number of bitcoins created daily, Thielen added. This has led to the supply-demand imbalance rising to 1:10.
“Over-the-Counter (OTC) trading desks deal with large institutional clients, and according to aggregate inventory data, balances have fallen from nearly 10,000 BTC in Q2 2023 to less than 2,000. This shows that institutions such as Bitcoin ETF issuers, through… Market makers, would have to buy Bitcoins directly from exchanges.The supply-demand imbalance is 1:10 (mined daily versus daily demand on ETFs), Thielen noted.
Outflows from Grayscale's GBTC ETF increased late last week, with the fund losing $600 million on Thursday, its biggest single-day recovery in more than a month. Meanwhile, according to 10X Research, inflows into BlackRock's IBIT fell to $202 million on Friday after three straight days of $500-600 million.
According to Thelin, the slowdown is a temporary phenomenon at the end of the month, and strong flows could resume this week.
“We expect BlackRock flows to resume this week. If Grayscale flows fall below $100 million, Bitcoin will make a big move higher,” Thielen noted.
Bitcoin was trading at $63,300 at press time, representing a 2% increase over 24 hours and a 22% rise in seven days.
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