Memecoins
Here are 3 Meme Coins that fit together well today, as Meme Mania resumes
The meme rally goes beyond GameStop to these three popular meme tokens.
Most investors are well aware that there is significant overlap between meme stocks and the dog-inspired meme. cryptocurrencies we have all learned to love or hate. In today’s market, the most attention is paid to meme stocks Stoppage of playwhich more than doubled in pre-market trading this morning, on a tweet from meme stock legend Keith Gill (also known as Roaring Kitty).
For investors in cryptos meme Dogecoin (DOGE 2.65%), Floki Inu (FLOKI 14.29%), and Bonk (BONK 5.38%), intraday movements of 3.7%, 14.8% and 9.7%, respectively, are logical. These movements were observed at 11:45 a.m. ET, after yesterday’s close.
Let’s take a deeper look at what’s driving these tokens higher today and what traders are pricing in.
The meme rally is gaining momentum
Gill’s alleged gamble certainly raised eyebrows. The meme trader, who many rallied behind during GameStop’s previous rally, has amassed an absolutely huge $116 million position in GameStop. The move suggests he believes another rally is more likely than not over the next three weeks (his call options expire June 21).
For meme traders on the stock market or digital asset exchanges, timing is everything. Betting on when an influx of capital will flow into these assets, and being right, is really the only way to benefit from the massive volatility many of these assets are experiencing. It is also true that historically, meme tokens have seen greater upside (in many cases) compared to meme stocks in previous rallies. As a result, it is not surprising to see increasing interest in Dogecoin, Floki Inu and Bonk in recent days.
Interestingly, the options trade and massive stock position Gill reportedly took appear to be more short-term in nature than his previous bet from late 2020, which included options expiring approximately six months later. Given the incredible volatility we’ve seen in recent weeks and the seemingly endless pressure from short sellers (related to GameStop’s lack of reluctance to issue new shares), it’s entirely possible that this delay longer short is appropriate at this time.
Is there enough fuel for this rally to continue?
There are a number of key differences to note between today and the meme rallies of late 2020 and early 2021 that took hold in both the stock and crypto markets. On the one hand, the interest rate environment is very different. Investors do not have access to ultra-cheap (almost free) money, which has been massively directed by retail investors into these speculative assets. To a large extent, the Federal Reserve has done a good job of suppressing this speculation. And the ability of crypto companies or projects to issue shares or tokens when prices rise could have a natural deterrent effect to reduce cycles. This is not good for speculators.
On the other hand, trillions of dollars are sitting in money market funds that could seek higher returns, given the opportunity. The question is whether retail investors who may have benefited from the last meme rally will return to the fray. Today’s price action in most meme assets suggests investors are exercising some level of caution, with much of this morning’s rally dissipating by early afternoon.
Personally, I think these assets are just too risky from a volatility perspective, and I will happily watch the chaos from the sidelines. But suffice it to say, I think we’re in for a crazy, wacky three weeks in these assets.
Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Mad Motley has a disclosure policy.