Is GameStop Rally Reviving Meme Coin Mania?
GameStop's recent stock surge has sparked excitement in the crypto market, leading to significant gains in meme coins like DOGE and SHIB.
The recent surge in GameStop Corp (NYSE: GME) stock has stirred excitement in the crypto market, particularly among meme coins like DOGE and SHIB, which gained 10%, with other meme coins rising by 34%. Three years after GameStop's dramatic rise on Wall Street, the stock is making headlines again. On Monday, May 13, GameStop's stock soared by an astonishing 75%, closing at $30.45. It continued to rise, gaining another 21% in after-hours trading.
This Wall Street surge triggered a massive rally in the Solana-based meme coin GameStop ($GME). Over the last 36 hours, the price of the GameStop meme coin skyrocketed by 1800%, leading to a broader rally in the meme coin sector.
These events have people wondering if we are witnessing a GameStop 2.0 rally. Keith Gill, credited with sparking the 2021 GameStop short squeeze, disappeared from social media on June 19, 2021. However, he resurfaced on May 13, posting a cryptic meme of a gamer sitting up in their chair. Within 24 hours of Gill’s return, GameStop shares surged by 111%. Roaring Kitty ($ROAR), a cryptocurrency created after Gill, also saw a 4,100% increase in the last 24 hours.
The GameStop stock rally on Monday resulted in over $1 billion in losses for short sellers, according to S3 Partners. The 74% rise in GME stock caused an $838 million mark-to-market loss for short-selling hedge funds. Ihor Dusaniwsky, S3's managing director of predictive analytics, told CNBC, “Expect short covering in this stock as it already had a 100/100 squeeze score prior to today’s trading.”
Several market analysts believe the GameStop short squeeze spurred a massive surge across the entire meme coin sector. Dogecoin (DOGE) and Shiba Inu (SHIB) rallied by 10% in the last 24 hours, with other meme coins seeing even higher gains. The GameStop surge by 74% on Monday led to increased meme coin activity, attracting crypto traders. Memecoins experienced a notable start to the week, with breakouts and decouplings across the board in the last 24 hours.
Trading volumes for the top 50 assets in this category surged by more than 34%. Coins like $PEPE, $MAGA, $MOG, $BITCOIN, $PONKE, $PEPE2.0, $SPX, and $ANALOS are worth watching for potential volatility opportunities, according to Santiment. However, some market analysts caution that we are not yet seeing a frenzy comparable to 2021. eToro market analyst Josh Gilbert noted that the current outstanding shorts in GameStop are much smaller compared to 2021. Thus, the upward move is expected to be smaller.
Gilbert also pointed out that the market environment is very different from that in 2021. "The environment is just not comparable to 2021 when interest rates were at rock bottom, governments were providing fiscal stimulus globally, and major economies had little to no inflation," he said.
Despite the differences, the recent developments have brought significant attention to the meme coin market. The GameStop rally has shown that meme coin mania might be making a comeback, albeit in a different market context. Investors are keenly watching for signs of a potential rally in the crypto market. The GameStop saga, once again, highlights the unpredictable nature of both stock and cryptocurrency markets, driven by social media influence and investor sentiment.
In conclusion, the recent GameStop rally has triggered excitement and significant activity in the meme coin market. While the current environment differs from the 2021 frenzy, the developments indicate that meme coins still hold substantial influence and potential for volatility. Investors should remain cautious and informed, watching key indicators and market trends as the situation evolves.