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A Bitcoin Warning Signal Blares From Surging Interest in Shiba Inu

Open interest or the dollar amount locked in open SHIB futures contracts has topped $100 million for the first time since February.

By Omkar Godbole
AccessTimeIconAug 12, 2023 at 5:22 a.m. UTC
Updated Aug 12, 2023 at 1:34 p.m. UTC
SHIB meme coin signals trouble for bitcoin's price (Atsuko Sato)
SHIB meme coin signals trouble for bitcoin's price (Atsuko Sato)
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Investors are again pouring money into meme-focused cryptocurrency Shiba Inu (SHIB) in a sign of caution for bitcoin (BTC) traders.

Open interest in Binance's SHIB futures has more than doubled to $101.65 million this month, hitting the highest since Feb. 5, according to data source Coinglass. SHIB futures are sized at 1,000 SHIB per contract with up to 25 times leverage.

SHIB's market value has jumped nearly 32% to $6.58 billion amid optimism that an impending layer-2 launch will help the cryptocurrency shed its meme-coin tag.

An increase in open interest alongside a rise in market capitalization suggests an influx of new money in the SHIB market. This scenario has historically presaged weakness in bitcoin, the leading cryptocurrency by market value.

Increased inflows into SHIB futures tend to occur at interim bitcoin price tops. (Coinglass)
Increased inflows into SHIB futures tend to occur at interim bitcoin price tops. (Coinglass) (Coinglass)

SHIB's open interest has risen above the $100 million mark at least seven times since its inception. The previous six spikes marked local bitcoin price tops.

The pattern is consistent with traditional markets where outsized gains in meme stocks relative to defensive plays are seen as a contrary indicator for the broader market. Bitcoin, the leading cryptocurrency by market value, has traded dead flat near $30,000 this month amid the SHIB rally, CoinDesk data show.

Past performance, however, is not a guarantee of future results and some analysts expect bitcoin to resume the uptrend.

Edited by Nick Baker.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole
Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Follow @godbole17 on Twitter

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