Meme stock GME makes a comeback, BTC gains are once again "beaten down."

Author: Mary Liu, BitpushNews

Since the BTC halving, the cryptocurrency market has continued to fluctuate, remaining in a consolidation phase for the past two and a half months. According to Bitpush data, Bitcoin has retreated from its gains on Monday, hitting a low of $61,045 during Tuesday's midday session, and as of the time of writing, it is trading at $61,590, down 2.4% in 24 hours.

Despite the sideways movement in the crypto market, the meme stock frenzy has returned with the reappearance of Keith Gill (Roaring Kitten), the "leader" of the retail trading surge surrounding GameStop, on X platform after three years. GameStop (GME) surged 60% on Tuesday after a 74% increase on Monday.

In addition to the rise of GameStop, cinema chain operator AMC's stock price increased by over 100%, SunPower (SPWR) rose by 90%, Beyond Meat (BYND) gained 25%, and Children's Place rose by 6%. By the end of the day, the S&P, Dow Jones, and Nasdaq indices all rose, increasing by 0.48%, 0.32%, and 0.75%, respectively.

According to TradingView data, GameStop's annual return is over 154%, while Bitcoin's annual return is around 129%, with most of GameStop's gains coming in the past two days, easily surpassing BTC.

During the COVID-19 pandemic, Kitten was a leading figure in the legendary GameStop event, with retail enthusiasm driving GameStop's monthly gains over 1,000%. Within 24 hours of Roaring Kitten's return to X, GameStop's stock price surged by 111%, while Dogecoin and SHIB rose by 6.2% and 5.4%, respectively. On May 13, the day after Keith Gill returned to social media, PEPE reached a historic high of over $0.000010.

Can the 2021 trend be replicated?

Some Wall Street strategists indicate that this new surge is far from the frenzy seen three years ago, and the current market dynamics are still a long way from the retail inflow levels of 2021.

According to VandaTrack data, GameStop saw a net inflow of $15.8 million on Monday, while AMC attracted $37.5 million. In January 2021, the peak single-day inflows for GameStop and AMC were $87.5 million and $170 million, respectively.

Marco Iachini, Senior Vice President at Vanda Research, wrote in a report on Tuesday, "Both stocks have seen a surge in capital inflow, but the scale is still just a small fraction of what we saw in early 2021."

Nicholas Colas, co-founder of DataTrek, pointed out the differences between this meme market moment and that of 2021 in a report to clients on Tuesday.

Colas stated, "Back then, retail traders were at home with nothing to do but trade stocks, and the U.S. federal government was not only dropping trillions in stimulus funds. Yes, we are confident that we will hear more about meme stocks in the coming weeks, but it won't be as enthusiastic as three years ago."

Will GameStop spark this year's altcoin season?

In the 2021 cycle, GameStop's short squeeze soon triggered a rebound in altcoins, and the legendary return of GameStop ignited new hope for altcoins.

According to a post by cryptocurrency analyst CryptoAmsterdam on May 14, based on historical chart patterns, the 2021 altcoin rebound was catalyzed immediately after the GameStop rebound:

The analyst noted, "The blue on the left represents the rise and peak of GME in 2021. The blue on the right shows what happened to altcoins after that event. Capital is always flowing."

In a subsequent post on X, CryptoAmsterdam pointed out that the current market capitalization of altcoins is also similar to the situation that catalyzed the altcoin bull market cycle in 2021, citing the following chart.

However, the current investment environment is different. eToro market analyst Josh Gilbert stated that the short positions on GameStop are much smaller compared to 2021, which could significantly dampen the "scale of the rise."

Josh Gilbert analyzed, "The current environment is incomparable to 2021, when interest rates were at their lowest, and governments worldwide were providing fiscal stimulus, with major global economies experiencing almost no inflation."

Inflation hinders the rise of risk assets

The latest Producer Price Index (PPI) released by the U.S. on Tuesday showed that wholesale prices rose 0.5% in April, higher than the market expectation of 0.3%. Inflation concerns continue to severely impact the prices of risk assets, as this latest data point indicates that inflation remains well above the Federal Reserve's 2% target, suggesting that interest rates will remain elevated for a longer period as the central bank attempts to curb rising living costs.

Secure Digital Markets stated that while meme stocks and token prices soared, U.S. stock index futures fell after the unexpectedly high PPI in April, undermining hopes for a rate cut by the Federal Reserve later this year amid weak inflation.

Secure Digital Markets analysts noted, "If the Federal Reserve does not cut rates early, investors may need to endure a relatively calm period, and the next market shock for Bitcoin is not far off."

Michaël van de Poppe, founder of MN Trading, believes that as long as Bitcoin bulls can hold above $60,500, the next resistance level is $63,000. However, if it breaks below the support level of $60,500, BTC could fall to a support range between $52,000 and $55,000.