Investors are once again directing their funds towards the meme-focused cryptocurrency Shiba Inu (SHIBA), signaling a note of caution for Bitcoin traders.
Open interest in Finance SHIP features has more than doubled this month, reaching $101.65 million, marking the highest point since February 5th, as reported by data source CoinGlass. These SHIP features are structured at 1000 SHIP per contract, allowing for leverage of up to 25x.
The market value of SHIB has surged by nearly 32%, now standing at $6.58 billion. This surge is driven by the optimism surrounding an upcoming layer 2 launch that is anticipated to steer the cryptocurrency away from its “meme coin” classification.
The surge in open interest combined with the rise in market capitalization suggests an influx of fresh capital into the SHIB market. Historically, such a scenario has foreshadowed weakness in Bitcoin, the foremost cryptocurrency by market value. SHIB’s open interest has exceeded the $100 million threshold around seven times since its inception, with the previous six instances correlating with local tops in Bitcoin’s price.
This pattern mirrors conventional markets, where substantial gains in meme stocks compared to more defensive investments are often interpreted as a contrary signal for the broader market. Despite the SHIB rally, Bitcoin has remained relatively stagnant near $30,000 throughout the month, according to CoinDesk data.
However, it’s important to note that past performance doesn’t guarantee future outcomes, and some analysts maintain expectations of a resumption in Bitcoin’s upward trajectory.
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