GameStop (GME), a meme coin on the Solana blockchain, gained traction a few days ago as the crypto market bounced back from the recent downturn. Experiencing a surge of more than 1600%, the token grabbed the attention of traders, investors, and the entire crypto community, by hitting a new all-time high, accompanied by soaring in 24-hour trading volume by 374.48%. However, the party seems to have stopped, as demonstrated with by over 45% decrease in value of GME over the past day. As the crypto community ponders into what’s going on with the Solana meme coin, let’s delve into the reason behind the sudden fall into Gamestop token price. this fall.
Market Performance of GameStop (GME)
GME has experienced high price volatility having decreased by 45% in the past day. This comes after the token demonstrated an astounding performance with a 2134.23% surge over the past 3 days.
Additionally, the GameStop meme token has seen a decrease of 37.3% in market cap to reach $68.7 million, dropping from 395th position to 525th, according to CoinMarketCap. GME’s 24-hour trading volume also decreased from 374.48% to 3% to record $191.6 million
The high trading volume relative to market cap, with a ratio of 277.15%, highlights the excessive trading activity compared to the token’s value. The recent all-time high of $0.0219 on May 15, 2024 was followed by a rapid decline of 53.89% in 21 hours.
Top Reasons GameStop (GME) Fell
GameStop (GME) price dropped fueled by several reasons.
1. “Pump and Dump” Speculations
Speculation regarding GameStop (GME) potentially being part of a pump and dump signal scheme may have led to a recent drop in its price for various reasons. Firstly, investor distrust arises as chatter about a possible scam causes investors to sell off their holdings to avoid potential losses.
This fear-driven behavior results in a self-fulfilling prophecy, driving the price down.
Market panic follows suit, with holders engaging in panic selling, further lowering the price, especially during rapid and high-volume sell-offs. The token’s reputation suffers, diminishing investor interest and causing a price decrease.
Speculation also impacts liquidity, reducing market participation and making it challenging for sellers to find buyers without lowering prices.
Worse way to spend your money – getting scammed by GameStop pump n dump or betting Xander to win a major?
— W (@ZitiDoggsGolf) May 13, 2024
2. Market Speculation
The initial surge could have been driven by speculation rather than fundamental value, which is often unsustainable. Once the speculative buying pressure eases, the price can fall as quickly as it rose.
The recent price pump was partly attributed to social media posts by influential figures like Keith Gill, also known as TheRoaringKitty. His return to social media may have sparked interest in the token, but the subsequent lack of follow-up actions could have lead to a decrease in hype and a price drop.
Cory Mitchell, an analyst at Trading.biz, discussed the recent big movement in stocks, emphasizing the importance of volume for traders. He mentioned that the current hype is based on speculation rather than solid fundamentals.
Gill’s post on X hints at interest in GameStop, which has seen a significant surge in share prices reminiscent of its meme-stock heyday. Mitchell had warned that these companies are not fundamentally strong and urged traders to be cautious and use stop losses.
Roaring Kitty’s involvement in GameStop’s rally is noted, with the company still struggling financially. Howard Ehrenberg, a partner at Greenspoon Marder, had also pointed out that the movement in GameStop shares was likely driven by shorts being squeezed, and warned that the price could reverse just as quickly.
3. Liquidity and Volume Changes
A sudden surge in trading activity may cause prices to rise, however, if the activity is not maintained, prices can plummet just as quickly. The trading volume of the GameStop (GME) experienced a significant increase of 374.48% during the pump, but has since drastically dropped to around 3%.
Conclusion
The recent decline in GameStop (GME) price on the Solana blockchain is attributed to speculation of a “pump and dump” scheme, investor distrust, dwindling liquidity, initial surge fueled by speculation, warnings from analysts, and fluctuations in trading volume. This serves as a cautionary tale in cryptocurrency trading.