Popular meme stocks rally again as cryptocurrencies stabilize after a volatile May. Analysts call this a “fear of missing out on something,” or FOMO, as traders move from one hot market to another.
“We continue to see the rotation from crypto to preferred stock by the Reddit crowd,” wrote Lev Borodovsky, editor of The Daily Shot newsletter, in an email to CoinDesk. “I noticed this connection a few months ago.”
With bitcoin under pressure lately, stocks are even catching a bid. Stocks such as AMC Entertainment (NYSE: AMC), BlackBerry (NYSE: BB), GameStop (NYSE: GME) and even Wendy’s (NASDAQ: WEN) have rebounded strongly over the past month.
Borodovsky uses an equal weight basket of seven stocks of popular memes overlaid on the price of bitcoin. Its graph shows the occasional rotation over the past few months.
“Even stocks rise beyond their reasonable valuations based solely on the enthusiasm of retail investors who are often more there for fun than making money,” wrote Mati Greenspan, founder of Quantum Economics, in a bulletin published on Wednesday.
Over 63% of all new trades executed by UK traders between May 23 and June 2 involved financial derivatives linked to AMC shares, according to David Jones, market strategist at Capital.com, a European trading platform and investment.
“Volatility is really off the charts and the odds are, much like the cryptocurrency rout in May, when the price changes then a lot of fingers will get burned,” Jones wrote in an email to CoinDesk.
Bitcoin is up around 25% year-to-date, compared to a nearly 1,000% increase by GME and AMC over the same period.
The cryptocurrency’s return is still ahead of the S&P 500’s 14% return since the start of the year. Bitcoin has lagged the 26% return of the Thomson Reuters Core Commodity CRB Index over the same period.