Why Bitcoin Didn’t Join the Latest Meme Stock Craze This Week

Bitcoin isn’t performing alongside meme stocks like it did three years ago, although this week’s stock action may indicate a big crypto rally is on the way.

GameStop and fellow AMC Entertainment are each up more than 160% over the past two days. Meanwhile, Bitcoin was little changed, down just 0.1% over the same period, according to Coin Metrics. In 2021, on the other hand, GameStop and AMC are up 821% and 373%, respectively, from January to April. Bitcoin’s gains during this period, although more modest, still amounted to 96%.

“This is not 2021, when the world was on lockdown and flooded with liquidity,” said Antoni Trenchev, co-founder of crypto exchange Nexo. “It’s worth remembering that the GameStop craze peaked in January 2021, well ahead of Bitcoin’s $60,000-plus highs in April and November of that year. If you’d like to read about the events of the past 24 hours, you might suggest that GameStop could act as a leading indicator ahead of the next step in the bitcoin halving.

“Today’s data on producer prices in the United States, higher than expected, serves as a reminder that the macro(economic) and inflationary context is not conducive to a bitcoin rally, and that it is likely to remain in a range after an explosive opening until 2024,” he added.

Certainly, there is a world of cryptocurrencies beyond bitcoin that includes meme coins. However, they did not join the party in the same way. Dogecoin and Shiba Inu coins are up about 3% each over the past two days, according to Coin Metrics.

Bitcoin is widely considered a class of its own in the crypto world, driven by macroeconomic factors when there are no specific catalysts to consider, such as the launch of Bitcoin exchange-traded funds in the United States. United or the Bitcoin halving which takes place every four years. .

Noelle Acheson, economist and author of the “Crypto is Macro Now” newsletter, added that the race for meme stocks was “more of a revving of the engines than a full takeoff” and that macroeconomic issues continue to make pressure on Bitcoin.

“Tomorrow’s inflation data could lift morale if it is better than expected, but there is great uncertainty,” she said.

This year, the United States allowed the introduction of the first Bitcoin ETFs, largely pushed by BlackRock, the world’s largest asset manager. The funds are expected to attract new types of investors and steady flows of new liquidity, while reducing volatility. Additionally, the 2023 regional banking crisis in the United States, which triggered the current Bitcoin cycle, has led many people to understand the cryptocurrency’s potential as an alternative financial system and hedge against uncertainty.

“Bitcoin is no longer considered a pure speculative asset,” Acheson said. “Its value narrative is more deeply ingrained, its holder base is much broader, and it has become to some extent institutionalized.”

Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, added that although bitcoin has been “lumped into the meme stock category” in 2021, the market is now starting to show signs of being taken more seriously.

“There has been a shift toward credibility in terms of longevity of holding Bitcoin,” she said. “Bitcoin has become more commercial in its ETF packaging, and retail and institutional investors tend to hold both Bitcoin and ether, rather than trading them like meme stocks.”

While bitcoin has rallied so far in the first quarter of the year, briefly approaching $73,000, it has pulled back recently, which many investors describe as a healthy development. With few catalysts and facing macroeconomic headwinds, these investors also warn that the Bitcoin price lull could last for several more months, and perhaps further drive prices lower.

“These consolidation periods can last a long time and are extremely boring,” Trenchev said. “Bitcoin’s narrative faucet has run dry…and I wouldn’t expect the revival of the meme stock frenzy to be a catalyst for Bitcoin’s next move.”