Today in Markets

Memestock Mania Returns

GME is riding high, is crypto next?
Jack Inabinet Jack Inabinet May 13, 20242 min read
market analysis Memestock Mania Returns

Memestock Pop-Off. GameStop Corporation (GME) shares soared as much as 126% off their Friday close, the stock’s largest single-day spike since the height of the memestock frenzy in January 2021! Why has GME surged in such dramatic fashion, and could this development be a harbinger of good tidings for your crypto bags?

While wild swings in GME triggered circuit breakers to halt trading numerous times this morning, highlighting the immense amount of realized volatility from this move, GME had been displaying unexpectedly high volatility throughout May after a short squeeze at the start of this month already sent the stock rallying by 40%.

Monthly options on US-listed stocks are set to expire this Friday and market participants were heavily long in-the-money GME call positions for this expiration, forcing the dealers who sold these calls to repurchase stock as the price rose to hedge their exposure, a textbook example of a short squeeze.

This explosion in GME has also been marked by the return of Roaring Kitty (aka Keith Gill) to Twitter, an investor who championed short squeezes throughout 2021 only to vanish from the internet shortly after GME’s third pump in July of that year.

His account tweeted out a picture of an individual leaning forward in a chair as if to indicate that it's time to pay attention on Sunday, following up the initial post with a series of inspirational clips from popular movies.

Popular American movie theater chain AMC Entertainment Holdings, another primary beneficiary of the 2021 memestonk craze, has not experienced triple-digit daily returns like GME, but still managed to pop over 50% on the day.

The last memestock short squeeze catalyzed by a historic GME run-up was followed by a near 12-month uninterrupted streak of gains for broader equity markets before the Federal Reserve’s interest rate raises sucked liquidity out of the market.

Although market participants are uncertain about the timing of future rate cuts, their eventual occurrence has been accepted with near certainty given the steadily deteriorating global economic condition, eliminating rate increases as a future risk factor for bulls.

With year-over-year growth in the monetary supply as measured by M2 turning positive for the first time since 2022 and animal spirits seemingly taking control of TradFi, it is certainly feels possible that prices of crypto assets prices could continue to run, drawing an increased amount of investors and their capital into the space as they seek return.

Jack Inabinet

Written by Jack Inabinet

273 Articles View all      

Jack Inabinet is a Senior Analyst with a passion for exploring the bleeding edge of crypto and finance. Prior to joining Bankless, Jack worked as an analyst at HAL Real Estate where he conducted market research and financial analysis for commercial apartment development and acquisition activities in the Seattle region. He graduated from the University of Washington’s Michael G. Foster School of Business and remains based out of the Seattle area.

No Responses