This year, campaigns such as the theater chain AMC Entertainment and the GameStop video game store (GME) have become a way for some retailers to show resistance to the so-called “free market”.
Since the end of January, thanks to the usual sentiment from Reddit communities such as r / Wallstreetbets, meme shares have risen this year. GameStop made a profit of 1,069.80% YTD, while AMC made a profit of 1,919.34%. At this rate, they should have returns of 2440% and 4378% yoy, respectively.
Around the same time, Bitcoin (BTC) dared to exceed the $ 50,000 limit for the first time in history after a brief cut in the now infamous GME and Tesla’s $ 1.5 billion purchase of BTC. Although the price of BTC continued to reach a full-time high of $ 64,889 on April 14, it has fallen at the time of writing and has reached its preliminary high of around $ 35,000.
GameStop / AMC correlation with BTC is unclear
On June 1, AMC shares began to gather again, doubling in one day. The stock rose from almost $ 30 to $ 65.57 in the middle of the June 2 trading session. BTC also recovered slightly from levels below $ 35,000 the same day, reaching a range of $ 38,600 on June 3. Stocks and cryptocurrencies are often traded based on market sentiment and seem to have been associated with their upward movement in the past, it is important to consider the relationship between them, if any.
Martin Gaspard, analyst at CrossTower, a digital activity exchange, told Cointelegraph: “There does not appear to be a significant correlation between the price of GME / AMC shares and the price of bitcoin. In the short-term press we saw earlier this year, it is likely that the price increase for both GameStop and BTC is random. ”
On the prospects for AMC in the near future, he added: “AMC could be the new GameStop. Stock market forums and online memes show that many traders seem to believe in AMC, despite the high price compared to baseline. ”
Due to the recent AMC frenzy, the company even received a credit rating upgrade. According to analysts at S&P Global Ratings, the company is less likely to default after capitalizing on the meme frenzy by accumulating liquidity in the stock markets. 11.55 million shares were sold at an average price of $ 50.85. Although the company’s bonds are in a more speculative bond class, very close to the corporate default or close to default, S & P increased its rating to CCC +, ie two levels above the previous level and seven levels below the investment level. …, BBB-.
In addition to the correlation aspect, Gaspard also commented: “We recently saw the fall in BTC prices and the rise in AMC prices, which further confirmed this correlation.”
It is often difficult to concretely prove a connection between GME / AMC shares due to the unstable nature of the cryptocurrency market. Johnny Liu, CEO of KuCoin, a cryptocurrency exchange, told Cointelegraph:
“There are similarities between these assets only for traders who know how to take advantage of high-risk trades, including Bitcoin, under pressure from regulation, influencers and assets that apparently have no real potential. We are all too familiar with the price fluctuations of both bitcoins and exchange For old entrepreneurs in the cryptocurrency market – a pumping and dumping job. ”
AMC shares rose 95.22% on June 2 to $ 62.55. Following the announcement of the sale of 11.55 million shares, the share price fell by 17.92%. This, combined with the ups and downs seen on GameStop earlier this year, is proof that any scenario is possible with these stocks due to the lack of basic information and information circulating on Reddit.
While Jim Kramer, host of CNBC’s Mad Money, suggested that now’s the time to get acquainted with GameStop and AMC, he warned that be affected “.
Du Kwon, co-founder of Terra, a protocol for stack coins linked to fiat currencies, explained the link between Reddit and the stock and told the Cointelegraph: “Both [GME and AMC] reflect retailers’ dissatisfaction with today’s high-frequency trading.” Symmetry in TradeFi World ”. He added: “It is no surprise that this will continue to happen all the time for other assets in the future, especially with the development of social media and the way people organize and interact on the Internet.”
When we talk about stocks with a well-established correlation with bitcoin, MicroStrategy (MSTR) is the first stock that comes to mind due to the large shares of bitcoins it has, as well as the extremely optimistic attitude of CEO and founder, Michael Saylor. The company owns 92,079 BTC worth more than $ 3.4 billion, which is 0.43% of the maximum token supply of 21 million tokens.