- How much correlation does GME’s rally and its social volume have with Bitcoin’s price movements?
- The impact of this was seen on the higher timeframes during the previous cycle
Bitcoin [BTC] climbed above local short-term resistance at $64.5k on May 15, just two days after GameStop [GME] rallied 284% as of last Friday. According to a recent post on X (formerly Twitter), Santiment claimed that the GME craze had actually spilled over into crypto.
Given the speculative nature of the crypto market, especially in the memecoin sector, this overlap makes sense. To find out if audience sentiment can mark the tops and bottoms of the cycle, AMBCrypto looked for more parallels.
The top and bottom of the short term coincided with increased social activity
In the short term, GME/AMC social mentions have highlighted the top and bottom of Bitcoin over the past three days. And yet, these social trends may not have foreshadowed a trend shift. It is more likely that they merely coincided with it.
May 13 was the Monday after the weekend when Roaring Kitty marked the end of a three-year hibernation with a meme on X (formerly Twitter). On May 15, the consumer price index and inflation figures were also released, and these came in lower than expected. This led to a greater tendency to take risks among the participants.
GameStop’s social volume was exceptionally high in January and November 2021. In January 2021, Bitcoin prices had just recovered from a deep retracement to $31,000 before resuming their blistering rally.
On the other hand, the November 2021 social volume surge marked the top for the crypto, and BTC prices soon began to decline. So while the recent correlation has an explanation, there may be some substance to Santiment’s latest observations.
Traders and investors may want to keep an eye on these statistics in the future.
What about the capitalization of the altcoin market?
Source: TOTAL.3 on TradingView
GME’s social volume spikes in January and November 2021 coincided not only with Bitcoin’s rally and peaks, but also with the capitalization of the altcoin market. However, the May 2024 version did not. In fact, the market capitalization of altcoins has increased since October 2023.
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In conclusion, the relationship appears to be that of a rise in GME social activity, reinforcing a prevailing bullish trend in the crypto market. However, it won’t necessarily produce an instance.