Memecoins
Here are 3 meme coins that are doing well today, as meme mania resumes
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, most of the attention is paid to meme stock GameStopwhich more than doubled in premarket trading this morning, on a tweet from meme stock legend Keith Gill (also known as Roaring Kitty).
For cryptocurrency investors meme Dogemoneta (CRYPTO: DOGE), Floki Inu (CRYPTO: FLOKI) e Good (CRYPTO:BONK), intraday movements of 3.7%, 14.8% and 9.7% respectively make sense. These movements were observed at 11:45 am ET, from yesterday’s close.
Let’s take a deeper look at what is driving these tokens higher today and what traders are discounting.
The meme rally takes hold
Gill’s alleged bet certainly raised eyebrows. The meme trader, who many supported during the previous GameStop rally, has amassed an absolutely massive $116 million position in GameStop. The move suggests he believes another rally is more likely than not in the next three weeks (his call options expire on June 21).
For meme traders in the stock market or digital asset exchanges, timing is everything. Betting on when a capital flow will come into these assets, and being right, is really the only way to benefit from the enormous volatility that many of these assets see. It is also true that meme tokens have historically rallied more (in many cases) than meme stocks during previous rallies. It is therefore not surprising that interest in Dogecoin, Floki Inu and Bonk has grown in recent days.
Interestingly, the options trade and massive stock position that Gill has reportedly taken appear to be shorter-term in nature than his previous bet in late 2020, which included options expiring about six months in the future. Given the incredible volatility we’ve seen in recent weeks and the seemingly endless pressure from short sellers (tied to GameStop’s lack of reticence to issue new shares), it’s entirely feasible that this shorter time frame is appropriate Right now.
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 have taken hold in both the stock and cryptocurrency markets. First, the interest rate environment is very different. Investors do not have access to the ultra-cheap (almost free) money, which has been directed en masse by retail investors into these speculative assets. To a large extent, the Federal Reserve has done a good job of containing such speculation. And the ability of crypto companies or projects to issue shares or tokens when prices rise could serve as a natural deterrent to squeeze cycles. This is not good for speculators.
The story continues
On the other hand, there are trillions of dollars sitting on the sidelines in money market funds that could be looking for higher returns should the opportunity arise. The question is whether retail investors who may have benefited from the latest meme rally will return to the fray. Today’s price action across most meme assets suggests that investors are showing some level of caution, with much of this morning’s rally dissipating as of early afternoon trading.
Personally, I think these assets are simply 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 wild and wacky three weeks for these assets.
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Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Here are 3 meme coins that are doing well today, as meme mania resumes was originally published by The Motley Fool