As we witness investor enthusiasm return to the meme-centric cryptocurrency Shiba Inu (SHIB), this trend could be an interesting watch for those focused on bitcoin trading strategies. A striking surge in Binance’s SHIB futures open interest to $101.65 million this month, a peak not seen since early February, hints at an unusual correlation as reported by data provider Coinglass. Each SHIB future contracts are packed with 1000 SHIB and offer a lucrative leverage of up to 25x.
An optimistic outlook is accompanying this trend. The imminent arrival of Layer 2 on the SHIB network is fueling this positivity, pushing its overall market cap up by an impressive 32% to land at $6.58 billion. The dream of SHIB shedding its ‘meme coin’ label seems closer than ever. Intriguingly, the concurrent movement of a rising market cap and increased open interest indicates a significant inflow of fresh capital into the SHIB market.
Why does this matter for bitcoin traders, you may ask? Historical data shows that periods of heightened interest in SHIB futures have usually signaled periods of lethargy for the leading cryptocurrency by market value – bitcoin. The peculiar pattern has been noted at least seven times since SHIB made its entry into the market, where each spike into and above the $100 million threshold coincided with a local peak in the price of bitcoin.
This can be reminiscent of traditional markets where overblown returns on meme stocks, as compared to their defensive counterparts, have traditionally foreshadowed a sluggish period for the broader market. And as SHIB makes substantial leaps, the performance of bitcoin appears stagnant around the $30,000 mark this month.
But, in an arena as volatile as cryptocurrency markets, the past is not always an accurate prologue to the future. Some market observers argue that bitcoin could reroute to its upward trajectory. So, whether the ongoing SHIB rally hints at an impending slowdown for bitcoin remains an exciting speculation and definitely something to keep an eye on for every crypto enthusiast.
Source: Coindesk
