GME, AMC Surge 271%: Impact on Meme Coins?

Key Takeaway

• GameStop (GME) and AMC Entertainment (AMC) shares surged following a social media post by Keith Gill, with GME up 271%.
• Meme stock rally influenced meme coin prices, yet major cryptocurrencies like Bitcoin and Ether remained stable, indicating market maturity.
• Institutional investments in Bitcoin ETFs by entities like the State of Wisconsin Investment Board signal growing acceptance of cryptocurrency.

Meme Stock Rally Ignites

This week, the financial markets witnessed a significant rally in meme stocks, notably GameStop (GME) and AMC Entertainment (AMC), following a social media post by Keith Gill, also known as Roaring Kitty. Gill, who became a central figure in the 2021 GameStop trading frenzy, made his first post in three years on X (formerly Twitter), sparking widespread investor interest. GameStop's shares soared to a high of $64.82 on Tuesday from last Friday's close of $17.46, marking a 271% gain before experiencing a pullback. This resurgence of interest also spilled over into the cryptocurrency market, with a crypto token named after GameStop, despite no affiliation with the company, surging 3,800% in three days, according to CoinGecko data. Another token, Roaring Kitty, saw a 6,000% increase in two days, only to fall 85% from its peak on Wednesday.

Cryptocurrency's Response to Meme Stocks

The rally in meme stocks has had a noticeable impact on the cryptocurrency market, with certain meme coins experiencing significant price movements. Pat Doyle, a Blockchain Researcher at Amberdata, noted the overlap in trading between crypto and meme stocks, emphasizing the influence of narratives and investor attention on asset prices. Despite the excitement around specific meme coins and stocks, the broader crypto market, including major cryptocurrencies like Bitcoin and Ether, remained relatively stable during this period. This stability suggests a maturing market that is increasingly influenced by macroeconomic conditions rather than isolated social media-driven events.

Institutional Interest in Cryptocurrency

The recent meme stock rally coincides with the disclosure of investment firms' equity holdings in the first quarter through 13-F filings with the U.S. Securities and Exchange Commission. Notably, the State of Wisconsin Investment Board reported new investments in Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust, highlighting growing interest from pension funds in cryptocurrency. This institutional engagement is a significant development for the crypto market, suggesting a broader acceptance and potential for increased stability and growth. Bitcoin and Ether have seen modest gains over the past week, further indicating a cautious but growing confidence among investors.

Market Sentiment and Future Outlook

The meme stock phenomenon and its impact on both the stock and cryptocurrency markets underscore the evolving dynamics of retail trading and investor sentiment. While the rally in meme stocks and certain meme coins points to a heightened risk appetite among investors, it also reflects the ongoing influence of social media and individual personalities like Keith Gill on market trends. However, the broader crypto market's stability suggests a maturing landscape that is less susceptible to short-term speculative frenzies. As the market continues to evolve, the interplay between traditional financial assets and digital currencies will likely offer new opportunities and challenges for investors.

Street Views

• Pat Doyle, Amberdata (Neutral on crypto and meme stocks):

  "I think if you look at crypto and meme stocks, there is a lot of overlap in trading. Narratives and investors’ attention often have an outsized impact on the trading of such assets."

• Steven Lubka, Swan bitcoin (Neutral on the meme stocks' rally):

  "The meme stocks’ rally this week signifies increased risk appetite across the market, but was specifically a response to the return of Roaring Kitty... I think the rally is relatively isolated, and I don’t think it spills over too much."