Since the BTC halving, the crypto market has continued to fluctuate and has been in consolidation mode for the past two and a half months. According to Bitpush data, Bitcoin retreated from Monday's gains and hit a low of $61,045 during Tuesday's midday trading. As of press time, the trading price was $61,590, down 2.4% in 24 hours.
Despite the sideways movement of the crypto market, the meme stock craze has returned after Keith Gill (Roaring Kitten), the "leader" of the US retail investor speculation on GameStop , returned to the X platform after three years. The price of GameStop (GME) soared 60% on Tuesday after rising 74% on Monday.
In addition to GameStop's gains, movie theater chain operator AMC rose more than 100%, SunPower (SPWR) rose 90%, Beyond Meat (BYND) rose 25%, and Children's Place rose 6%. As of the close of the day, the S&P, Dow Jones and Nasdaq all rose, up 0.48%, 0.32% and 0.75%, respectively.
According to TradingView data, on the yearly chart, GameStop stock has returned over 154%, while Bitcoin has returned around 129%, with most of GameStop's gains coming in the past two days, easily outperforming BTC.
Kitten was the leading figure in the GameStop saga during the COVID-19 pandemic, with retail investor enthusiasm driving GameStop's monthly gains to over 1,000%. In the 24 hours after Roaring Kitten returned to X, GameStop's stock price rose 111%, while Dogecoin and SHIB rose 6.2% and 5.4% respectively during the same period. On May 13, the day after Keith Gill returned to social media, PEPE hit an all-time high of over $0.000010.
Can the trend of 2021 be repeated?
Some Wall Street strategists say this new outbreak is far less frenzy than three years ago, and the current market trend is still far from the level of retail inflows in 2021.
GameStop saw net inflows of $15.8 million on Monday, while AMC attracted $37.5 million, according to VandaTrack data. In January 2021, GameStop and AMC saw peak daily inflows of $87.5 million and $170 million, respectively.
“Both stocks saw a surge in inflows, but the magnitude remains a fraction of what we saw in early 2021,” Marco Iachini, senior vice president at Vanda Research, wrote in a research note on Tuesday.
DataTrek co-founder Nicholas Colas noted the differences between this meme market moment and 2021 in a note to clients on Tuesday.
“That was a time when retail traders were stuck at home with nothing to do but trade stocks, and the federal government was airdropping trillions in stimulus money,” Colas said. “Yes, we’re sure we’ll hear more about meme stocks in the coming weeks, but not with the same enthusiasm as three years ago.”
Will GameStop spawn this year's copycat season?
In the 2021 cycle, the Altcoin rally was triggered shortly after the GameStop short squeeze , and the return of the GameStop legend ignited new hope for Altcoin.
According to a May 14 post by cryptocurrency analyst CryptoAmsterdam, the 2021 Altcoin rally was catalyzed immediately after the GameStop rally, based on historical chart patterns:
"The blue on the left is the 2021 run-up and top of GME. The blue on the right is what happened to Altcoin after that event. Money is always flowing," the analyst said.
CryptoAmsterdam noted in a subsequent X post that the current market capitalization of Altcoin is also similar to the situation that catalyzed the Altcoin bull cycle in 2021, citing the following chart.
However, the investing environment is different today, and eToro market analyst Josh Gilbert said short positions in GameStop are much smaller than in 2021, which could significantly curb the "size of the rally."
Josh Gilbert analyzed: "The current environment is not comparable to 2021, when interest rates were at their lowest level, governments provided fiscal stimulus around the world, and there was almost no inflation in major economies around the world."
Inflation holds back risk assets
The latest producer price index (PPI) released by the United States on Tuesday showed that wholesale prices rose 0.5% month-on-month in April, higher than the market expectation of 0.3%. Inflation concerns continue to weigh heavily on risk asset prices. This is the latest data point showing that inflation is still well above the Federal Reserve's 2% target, suggesting that interest rates will remain higher for a longer period of time as the US central bank tries to slow the rise in the cost of living.
While meme stocks and tokens surged, U.S. stock futures fell after unexpectedly high producer price index (PPI) readings for April dampened hopes of a Federal Reserve rate cut later this year amid weak inflation, according to Secure Digital Markets.
"If the Fed does not cut interest rates early, investors may need to go through a period of relative calm, and the next market shock for Bitcoin is not far away," said analysts at Secure Digital Markets.
Michaël van de Poppe, founder of MN Trading, believes that as long as Bitcoin bulls can hold $60,500, the next overhead resistance is $63,000. But if the $60,500 support level is broken, BTC may fall to the support level between $52,000 and $55,000.
