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Cryptocurrencies and Meme Stocks: What is the Next GameStop or Dogecoin and Should You Care?

Thursday, May 13, 2021 04:15 PM | Neal Farmer

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Cryptocurrencies and Meme Stocks: What is the Next GameStop or Dogecoin and Should You Care?

As time moves on, memes become more common and show up in more of our every day life.

Sophisticated investors (who have never once gotten sucked in on an overly speculative asset) now have to watch Redditors make bigger returns from a day of YOLO trading in dogecoin that they do in a year from GE stock and Treasury bonds. Why bother with PEG ratios and technical analysis when you can just watch Elon Musk’s Twitter account and buy before he goes on Saturday Night Live?

A big problem with reddit stocks and other meme investments like cryptocurrencies (among many) is timing. Buy and hold is very often the best way to invest as no one can reliably time the market, however, holding dogecoin for retirement in 40 years doesn't seem like the best play. Here is a quick look back at some meme investments that have already had their day, as well as some that may be up for a time in the spotlight soon.

The OGs of the Game

 

While millions of people only recently discovered the lunacy of r/wallstreetbets, the subreddit has been active for quite some time and GameStop was not the first trending stock there. Companies such as Tesla (TSLA) and DraftKings (DKNG) have long been loved by the Reddit community and really saw their share price surge following the coronavirus pandemic. The problem with both of these stocks is that they seem to have already hit their temporary peak, TSLA is down from $880 a share early in January to roughly $575 currently while DKNG has dropped from $71 to $41 just since mid March.

That said, both of these stocks have real businesses behind them and there are plenty of reasons for a positive outlook going forward for Tesla, which is making both profits and innovative technology in a previously stuck-in-its-ways industry. and DraftKings, meanwhile, is in a growing sports betting market as gambling restrictions are lifted in many states. The concern for investors in these companies is that their valuations remain extremely high even after their recent declines.

Currently Trending

 

Everyone knows about Bitcoin (BTC) and GameStop (GME), but these investments already seem to be less propped up by Reddit and other social media groups. Bitcoin has met some real resistance over the past month after peaking above $63,000 in mid April but just today fell back below $50,000. That still remains far above the roughly $10,000 it traded at back in October but the surge in price seems to have slowed considerably as it reached over $50,000 first back in February.

Reddit has seemingly moved to Dogecoin (DOGE) which is a reference to the Doge meme that featured a Shiba Inu and was started entirely as a joke. DOGE traded for less than 1 cent back in January of this year and now is over $0.40 in May. The cryptocurrency particularly spiked upwards from $0.07 to $0.40 in a matter of a few days in mid April, which just happened to be at the same time Bitcoin peaked and began its recent downward trend.

Aside from cryptocurrencies, GME seems to be old news now as the video game retailer's stock has managed to trade between $100 and $200 over the past two months but remains down from roughly $260 early in March and a high of $483 back in January. Again GME remains far above the $17 a share it traded at to start the year but it seems to be a strong downward trend as new meme stocks have left it behind.

What’s the Next Meme?

The strongest Reddit-fueled investment right now seems to be Dogecoin and it might not be too late to ride that train. It certainly is possible that DOGE has already reached its peak when it briefly traded above $0.70 last week but many might see the current market as an opportunity to buy low.

Additionally, AMC Entertainment (AMC) was one of the many meme stocks along with GameStop back in January that saw its share price shoot upwards, however, it did not gain anywhere near the same traction as GME. Despite this, Redditors seem to still be pulling for AMC stock. Its current share price around $12 is way up from the roughly $5.50 it traded near in mid February after the original Reddit volatility in late January. Ever since then, AMC has been on an upward trend and doesn’t appear to have stopped yet.

Lastly, a few other investments that seem to be trending on popular subreddits are Microvision (MVIS) and Ethereum (ETH). The support behind these two are not nearly as strong but have the potential to gather more fuel. MVIS has already seen some heavy volatility likely from Reddit and other social-media traders as it traded below $2 back in November and spiked above $23 in both February and April. However, MVIS is now trading around $13 where it had some support just below $12 and has shown the ability to surge multiple times.

Ethereum meanwhile is not exactly new to cryptocurrency traders. It has been rising since the pandemic began but really has accelerated since March of this year. ETH was briefly below $1,600 in late March and now is north of $3,800 and is setting all time highs most days since late April. As traders look for other cryptocurrencies, Ethereum has plenty to gain especially since it didn't originate as a joke such as Dogecoin.

Wrapping Up

It’s impossible to know for certain which meme investments will move next as few saw the recent rise of Dogecoin coming, at least not to this extent so fast. It’s far safer and likely smarter to not invest in these kinds of assets as the volatility is extremely high and most investors probably want to stay away from putting their retirement money into Dogecoin. However, for those who want to throw some spare change and speculate on the movement of the hottest cryptocurrency at the time, keep your eyes peeled to r/wallstreetbets and Elon Musk’s twitter for those YOLO gains.

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