A few weeks ago, WallStreetBets icon Keith Gill (better known as "Roaring Kitty") made his comeback. Similar to three years ago, the following run on "meme stocks" caused significant price fluctuations. Some speculators hope that GameStop could use the new funds to buy bitcoin.
The movement around Keith Gill is a loose anti-Wall Street community of private investors on the Internet. Their narrative ("meme") is what bonds the community together. The movement's goal is to drive up the price of meme stocks and bring down hedge funds with significant short positions. While the GameStop saga was halted in 2021 by dubious restrictions from leading investment providers, Keith Gill's recent reappearance on social media has started a second round.
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What has happened so far
In early 2021, Keith Gill (known on Reddit as "Roaring Kitty") first shared his bullish analysis of GameStop (GME), a struggling video game retailer. His posts sparked a massive buying spree by individual investors on Reddit's WallStreetBets forum, targeting hedge funds that had bet heavily on GME's decline. At the time, the number of shorted shares relative to the total public float was a staggering 140%.
This collective effort by retail investors initiated on Reddit caused GameStop's stock price to soar over 1,000% in less than a month. This caused hedge funds with leveraged bets on a drop in price, such as Melvin Capital, to lose billions. The unprecedented rise also caught the attention of regulators and led to a congressional hearing.
During this time, Robinhood, the leading investment app in the U.S., disabled the buy button for GameStop, allowing only sell orders. Robinhood cited increased clearing house requirements, but critics suspected pressure from Citadel, a market maker affiliated with Melvin Capital. This further fueled the anti-Wall Street movement. GameStop mania also sparked a spike in the price of meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB), which gained popularity among the same community of retail investors. Elon Musk's endorsement of Dogecoin further fueled its rise.
Roaring Kitty's Return
On May 13, 2024, Keith Gill ("Roaring Kitty") broke his nearly three-year social media silence with a meme on X (formerly Twitter). His hinted return excited private investors, much like the original GameStop saga in 2021. GameStop's (GME) stock price jumped more than 90% on May 14, leading to several trading halts. In addition, on June 7, Gill held his first livestream in years, which provided few new financial insights but hinted at arbitrary trading halts by the exchanges due to his comments. More than 600,000 viewers watched the livestream in real time.
But as in the first round of the saga, the community around Roaring Kitty is fighting a battle on uncharted territory. Those who seek to bring down Wall Street by investing in Wall Street institutions will inevitably face resistance. Robinhood & Co. impose trading restrictions at record speed thanks to automated processes. Moreover, the management of meme stocks want their piece of the pie. Last week, GameStop raised $2.1 billion by issuing new shares, which of course dilutes the price of existing shares.
A parallel financial system
The opportunity for bitcoin and the broader crypto ecosystem is obvious. The "digital gold" is the first asset without the possibility of dilution through inflation. Like the community around Roaring Kitty, bitcoin was created in direct response to the missteps of the traditional banking system. The decentralized network is governed by fixed rules. No actor can arbitrarily issue new bitcoins, impose trading stops, or otherwise prevent investors from investing.
In the DeFi space, users can trade any cryptocurrency via decentralized protocols like Uniswap without a centralized intermediary. Market making is done by a mathematical function with liquidity provided by other users. There are interfaces from various providers. As a result, these exchanges see real price discovery 24/7 without arbitrary intervention. This has led to a strange symbiosis between the GameStop movement and the crypto community.
Price of the GameStop (GME) Memecoin on Solana / Chart: Dexscreener
Since anyone can issue new cryptocurrencies, a completely independent memecoin named GameStop (GME) was created this February. The cryptocurrency has no connection to the company or its stock, only the name and ticker symbol are identical. Nevertheless, the memecoin benefited massively from Keith Gill's comeback. The price of the cryptocurrency soared by 5,000% during the livestream and is currently trading with a market capitalization of 110 million USD. Thanks to decentralized protocols, this meme mania can fully unfold in the crypto markets.
Bitcoin on the GameStop balance sheet?
Some investors are hoping for a new climax to the saga at today's GameStop annual meeting. Shareholders will be able to vote on some new proposals from management. Questions from shareholders about dilution and the prospect of issuing more shares are expected to be front and center. The company's strategy for using its more than $4 billion in cash reserves will also be a hotly anticipated topic. GameStop's core business of selling physical video games and consoles is in decline.
What could spark another run on the stock is a diversification of the balance sheet into bitcoin. Two of the strongest anti-Wall Street communities would be united, and GameStop would have an inflation-proof asset on its balance sheet. However, there is no evidence of such plans outside of blind speculation by bitcoin enthusiasts.
From GameStop to Dogecoin: the impact of digital community
Since the advent of the Internet, memes have become a central form of digital communication, spreading humorous, cultural, or social messages through easily recognizable images and short texts. This viral content often reflects current trends and can quickly spread through social media and forums, becoming part of the collective online consciousness.
With the introduction of NFTs and tokens in the crypto space, memes have evolved into digital assets that can be traded and owned. This technology allows memes to be uniquely attributed, increasing their value and creating a new dimension of ownership and commerce in digital culture.
The GameStop movement on Wall Street and the meme crypto movement demonstrate the significant power of this new form between the need for community and belonging and speculation. By May 2024, the combined market capitalization of the leading meme coins exceeded $57 billion, with Dogecoin (DOGE) alone valued at $24 billion.
This relatively new movement remains exciting to watch as it seems to resonate with younger generations in the investment sector. The billion-dollar values in the meme crypto space speak for themselves. GameStop's meme community is not to be underestimated either, as the collective has already brought down short hedge funds. The man behind the movement, Keith Gill aka Roaring Kitty, had around 600,000 viewers of his livestream last week, while Jerome Powell's Federal Reserve stream yesterday had around 35,000 viewers.
