Meme Stocks Fall Like Autumn Leaves... Bitcoin Also Plummets 8%

[Asia Economy Reporter Yujin Cho] The prices of US 'meme stocks' and Bitcoin are plummeting simultaneously. Concerns that the pace of monetary tightening, including interest rate hikes, could accelerate, combined with fears of the Omicron variant, are increasing risk aversion not only in stocks but across the entire asset market.

On the 13th (local time), video game retailer GameStop's stock closed at $136.88, down 13.92% from the previous session. This is the lowest level since last April, having plunged to about half its value over the past six months. On the same day, movie theater chain AMC Entertainment's stock also fell 15.31% to $23.24, returning to levels seen six months ago. GameStop and AMC are representative meme stocks that showed high volatility since January this year, with their gains once approaching 1000%.

The stock of Robinhood, which led the meme stock craze, also plunged to its lowest level since its initial public offering (IPO) on the same day. Since its listing on the Nasdaq market in July, Robinhood's stock price has been declining, closing at $19.70 on this day, breaking below the $20 mark. This represents a 48% drop compared to the IPO price of $38.

Bitcoin prices also plunged more than 8% on the day. According to Coinbase, Bitcoin prices fell as much as 8.4% intraday to $45,773. This is about a 30% drop from the peak of $69,000 on the 10th of last month, marking the fifth consecutive week of decline as of this day. Although Bitcoin recovered to the $50,000 level after four days due to low-price buying inflows the previous day, it fell below $50,000 again within a day.

The simultaneous sharp decline in meme stocks and Bitcoin reflects heightened caution toward risky assets. Experts are forecasting that the structural decline of risky assets has begun due to the combined effects of interest rate hikes and fears of the new Omicron variant.

Randy Frederick, Director of Trading and Derivatives Management at Charles Schwab, said, "Earlier this year, the government's aggressive economic stimulus led to a market boom, but as monetary policy shifts and liquidity injected into the market decreases, investment momentum in risky assets, including meme stocks, inevitably weakens."

With the shift in monetary policy in the US and other developed countries, the liquidity-driven rally that powered these stocks has ended, leading investors to start turning toward risk aversion regarding risky assets.

In particular, cryptocurrencies are reacting more sensitively to interest rate hike issues than the stock market. The belief that Bitcoin can serve as a hedge against inflation is also fading. Mark Chandler, Chief Strategist at Bannockburn Global Forex, pointed out, "(The assumption that cryptocurrencies) can be a hedge against inflation is not logical."

This content was produced with the assistance of AI translation services.